THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 
LOS  ANGELES 


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LABOR'S  CRISIS 


•The 


THE  MACMILLAN  COMPANY 

NEW  YORK         nOSTON   •    CHICAGO  •    DALLAS 
ATLANTA   •    SAN    FRANCISCO 

MACMILLAN   &   CO.,  Limited 

LONDON   •    BOMBAY   •    CALCtJTTA 
MELBOURNE 

THE  MACMILLAN  CO    OF  CANADA,  Ltd. 

TORONTO 


LABOR'S  CRISIS 

AN  EMPLOYER'S  VIEW 
OF    LABOR    PROBLEMS 


BY 

SIGMUND  MENDELSOHN 


THE  MACMILLAN  COMPANY 
1920 

AU  rights  reserved 


Copyright,  1920, 
BT  THE  MACMILLAN  COMPANY 


Set  up  and  electrotyped.     PubUshed,  August,  1920 


UNIVERSITY  OF  SOUTHERN  CALIFORNIA  LIBRARY 


INTRODUCTION 

This  book  makes  no  pretensions  to  a  scientific  study 
of  the  institution  of  labor  nor  of  the  causes  and  effects 
of  the  present  labor  unrest.  The  views  and  observa- 
tions presented  herein  may,  however,  have  some  value, 
even  to  the  student  of  labor,  because  they  are  based 
upon  the  practical  experience  of  an  employer  who  has 
to  deal  not  with  the  theories,  but  with  the  facts  which 
determine  the  relationship  of  capital  and  labor.  The 
political  economist  is  still  under  the  influence  of  the 
labor  conditions  of  the  nineteenth  century,  and  he  is 
slow  to  recognize  the  rapid  transformation  of  the  labor 
problem  in  more  recent  years.  A  labor  problem  still 
exists,  and  in  more  acute  form  than  ever,  but  it  con- 
cerns the  welfare  of  society  more  than  of  labor.  It  is 
no  longer  based  upon  excess  of  labor  but  upon  insuffi- 
ciency of  labor;  it  no  longer  relates  to  an  inadequate 
wage  but  to  an  inflated  wage;  it  no  longer  deals  with 
an  oppressed  suffering  class  but  with  an  all  powerful 
and  militant  element  which  is  striving  for  economic 
dominance.  The  existing  labor  problem,  unlike  the 
labor  problems  of  the  nineteenth  century,  does  not  in- 
volve vital  moral  principles,  nor  does  it  deal  with  any 

V 


vi  INTRODUCTION 

specific  evil  from  which  labor  is  suffering  at  the  pres- 
ent time.  It  does  not  stir  public  consciousness,  as  did, 
for  instance,  the  question  of  slavery,  child  labor,  or  the 
inhuman  working  and  living  conditions  of  the  laborer. 
It  is  nevertheless  recognized  as  the  outstanding  prob- 
lem of  the  day,  affecting  and  menacing  the  welfare  of 
society  wherever  the  employment  of  labor  is  an  eco- 
nomic and  social  necessity.  It  cannot  be  solved  by 
prescribed  fonnulas  or  principles,  whether  they  relate 
to  Profit-sharing,  Industrial  Democracy,  or  any  other 
scheme  for  conciliating  labor.  In  many  instances,  the 
problem  is  intensified  by  the  employer  himself,  for  the 
handling  of  labor,  whether  in  small  or  in  large  groups, 
demands  special  mental  and  temperamental  qualifica- 
tions, and  particularly  when  labor  is  animated  by  deep- 
rooted  discontent  and  unrest. 

The  phases  of  the  labor  problem  are  in  constant 
state  of  change,  and  the  theories  and  doctrines  of  yes- 
terday become  discredited  to-day.  The  relationship 
of  capital  and  labor  is  largely  under  the  influence  of 
fluctuating  economic  conditions,  and  a  dictatorship  of 
capital  may  be  transformed  into  a  dictatorship  of  la- 
l)or.  New  principles  and  policies  are  being  advocated 
to  insure  stal)ility  and  hanuony  in  this  relationship 
which  seem  pl.'uisil)le  when  demonstrated  on  the  ros- 
trum or  in  print,  but  fail  in  j)ractical  operation.  The 
cau.scs  and  effect  of  the  widespread  labor  unrest,  as 
well  as  the  proposed  remedies,  demand  study  of  the 


INTRODUCTION  vii 

labor  questions  at  close  range  and  under  all  moods  and 
conditions.  It  is  only  in  close  touch  with  labor,  that 
the  student  will  observe  the  deep  interest  of  capital  in 
all  matters  relating  to  the  welfare  of  the  laborer.  It 
is  true  that  selfish  business  motives  are  in  most  in- 
stances blended  with  this  benevolent  spirit  toward  la- 
bor, and  that  in  most  instances  it  is  an  essential  policy 
imposed  by  pressure  of  competition  and  by  the  urgent 
demand  for  labor.  But  the  fact  must  nevertheless  be 
recognized  that  capital  can  no  longer  completely  sep- 
arate its  own  interest  from  that  of  labor,  for  its  most 
valuable  asset  is  the  good-will  of  labor,  and  the  con- 
servation of  labor  is  its  deep  concern.  It  offers  to  the 
laborer  better  living  and  working  conditions ;  and  in 
many  instances  maintains  for  his  benefit  extensive 
welfare  work,  which  insures  him  against  the  conting- 
encies of  life  and  also  provides  him  and  his  family 
with  educational  and  recreational  facilities.  More- 
over, the  wage  is  no  longer  based  upon  the  economic 
principle  of  providing  the  laborer  with  the  means  for 
a  bare  existence  or,  according  to  the  more  advanced 
human  principle,  of  providing  him  with  the  means  to 
maintain  his  physical  efficiency.  The  wage  is  now 
adequate  to  insure  with  ordinary  care,  a  better  and 
more  stable  existence  to  the  laborer  and  his  family 
than  can  be  obtained  by  many  who  are  practicing  a 
profession  or  are  engaged  in  occupations  not  asso- 
ciated with  manual  labor.     Hence  neither  the  wage 


viii  INTRODUCTION 

nor  the  living  and  working  conditions  can  any  longer 
be  considered  important  factors  in  the  labor  problem. 

With  the  exclusion  of  the  main  causes  heretofore 
underlying  the  labor  problem,  it  becomes  all  the  more 
difficult  to  reduce  the  present  labor  problem  to  a  con- 
crete proposition.  We  know  of  its  existence  by  the 
manifestation  of  general  labor  unrest,  which  has  be- 
come the  accepted  term  for  the  new  labor  problem. 
"  Unrest  "  is  however  a  vague  and  an  elastic  term 
for  a  social  ill,  and  in  the  absence  of  tangible  symptoms 
the  remedial  measures  are  either  experiments  or  ex- 
pedients. Nevertheless  the  present  labor  unrest  is  a 
logical  sequel  of  the  conditions  under  which  labor  ex- 
isted until  very  recently.  It  should  be  borne  in  mind 
that  for  generations  the  laborer  remained  helpless  in 
his  degradation  and  subjection.  The  industrial  devel- 
opment of  the  nineteenth  century  of  which  (aside  from 
the  introduction  of  mechanical  power)  he  was  the  main 
factor  and  to  which  he,  his  wife,  and  his  children  con- 
tributed eleven  to  fourteen  hours  of  daily  toil,  only 
helped  to  intensify  his  misery  and  lower  his  level  in 
society.  His  in.separable  companion  has  been  poverty, 
and  his  training  and  his  characteristics  were  acquired 
in  the  school  of  poverty.  All  these  aspects,  and  many 
more,  have  to  be  considered  in  order  to  gain  an  intel- 
ligent conception  of  the  causes  of  labor  unrest  and  of 
the  elements  which  constitute  the  present  labor  prob- 
lem.    They  will  also  help  to  explain  the  present  ag- 


INTRODUCTION  .  ix 

gressive  attitude  of  labor  toward  capital,  for  the  vic- 
tim of  oppression  takes  naturally  to  the  role  of  an  op- 
pressor when  the  tables  are  turned. 

The  psychology  of  labor  strongly  influences  the  re- 
lation of  capital  and  labor,  as  well  as  the  performance 
of  labor.  The  heritage  of  the  laborer  is  mistrust  and 
prejudice  against  capital,  and  these  traits  can  only  be 
transformed  into  goodwill  and  confidence  when  the 
laborer  is  made  to  realize  that  his  own  welfare  is 
served  and  promoted  in  his  employment. 

The  instinct  to  move  onward  and  rise  to  a  higher 
level  is  strongly  developed  in  the  human  being  and  it 
forms  the  force  which  impels  and  stimulates  human 
efifort  and  activity.  This  instinct  manifests  itself  al- 
ready in  the  child  when  it  reaches  the  age  of  reasoning. 
It  continues  to  actuate  the  life  of  the  individual  in  all 
of  his  endeavors  until  old  age  no  longer  lends  force  and 
ambition,  aim  and  desires,  and  unrest  gives  way  to  a 
longing  for  rest  and  peace.  The  laborer  is  not  ex- 
cluded from  the  operation  of  this  law,  but  in  his  case 
the  effort  to  rise  to  a  higher  level  and  improve  his  ex- 
istence is  stamped  labor  unrest,  whereas  in  others  it  is 
considered  a  natural  state  of  mind  and  a  laudable 
ambition. 


CONTENTS 

PAGE 

Introduction v 

Poverty,  Its  Nature  and  Effect i 

Poverty  as  Related  to  Labor ii 

Characteristics  of  Capital  and  Labor 15 

Labor  not  a  Commodity 19 

Comparative  Value  of  Physical  and  Mental  Exer- 
tion    23 

Depletion  and  Deterioration  of  Labor     ....  29 

Labor-Saving  Inventions  and  Labor  Supply  ...  39 

The  Malthusian  Theory  as  Applied  to  Labor     .     .  42 

Maximum  Effort  the  Foundation  of  Society  ...  49 

Economic  Effect  of  Curtailed  Labor 53 

Can  Reduced  Hours  Advance  the  Welfare  of  Labor 

and  of  Society? 64 

Cost  of  Living  Subject  to  Psychological  Influences  71 

Inflated  Cost  of  Living  Due  to  Contraction  of  Labor  75 

Labor  Welfare  as  Related  to  Material  and  Social 

Welfare 78 

Causes  of  the  Present  Labor  Ferment 83 

Profit  Sharing  as  a  Basis  of  Insurance  and  Pensions  98 

Labor  Unrest  as  a  Check  upon  Industrial  Concen- 
tration    107 

Moral  Economics  as  Applied  to  Labor 114 


Xll 


CONTENTS 


Handling  of  Labor  in  Small  Plants     . 
Labor  as  It  Affects  the  Wife  and  the  Home 
Objections  to  a  Legislated  Minimum  Wage 

Housing  of  the  Laborer 

Inflation  and  High  Taxes  —  Their  Effect 


PAGE 

125 
141 

145 
151 
163 


LABOR'S  CRISIS 

AN  EMPLOYER'S  ANALYSIS  OF  LABOR  PROBLEMS 

POVERTY,  ITS  NATURE  AND  EFFECT 

Poverty,  unlike  wealth,  cannot  be  defined  in  mathe- 
matical terms  nor  can  it  be  measured  by  an  inventory 
of  assets  and  liabilities.  It  cannot  be  associated  with 
resources,  except  that  poverty  may  be  said  to  begin  with 
the  loss  of  material  resources  and  to  terminate  with 
their  acquisition.  It  can  lay  claim,  however,  to  one 
very  vital  asset,  namely,  muscle.  Muscle  determines 
physical  efficiency  and  the  earning  power  of  manual 
labor,  and  these  two  are  inseparably  linked,  the  lower- 
ing of  the  one  resulting  in  a  corresponding  impairment 
of  the  other.  Poverty  being  a  relative  term,  referring 
to  a  state  of  living,  does  not  lend  itself  to  concrete 
definition  and  is  open  to  various  interpretations.  To 
the  popular  mind  it  represents  a  low  standard  of  living' 
associated  with  an  unrelenting  struggle  with  want  and 
privation,  with  care  and  suffering,  and  often  also  with 
vice  and  temptation.  In  sociology  the  term  is  applied 
to  a  state  of  struggle  to  obtain  the  necessaries  of  life. 
Some  authorities  extend  the  line  of  poverty  to  a  point 
where  actual  want  does  not  prevail,   but  where  the 


2  LABOR'S  CRISIS 

worker  is  unable  to  obtain  those  necessaries  which  will 
permit  him  to  maintain  physical  efficiency. 

That  poverty  is  the  direct  result  of  modern  economic 
life,  and  not  a  mere  accompaniment,  and  that  the  in- 
adequate earnings  of  the  laborer  are  responsible  for 
his  low  standard  of  existence,  is  widely  accepted. 
Poverty  is,  however,  a  complex  social  problem,  which 
cannot  be  satisfactorily  explained  by  any  single  or 
special  cause ;  and,  although  the  connection  between 
poverty  and  low  earnings  is  indisputable,  forces  other 
than  those  produced  by  external  conditions  strongly 
operate  in  determining  poverty  and  also  the  earning 
power  of  labor  —  for  instance,  mental  and  physical 
qualifications,  character,  and  even  temperament  are 
some  of  the  controlling  factors  in  the  struggle  for  exist- 
ence. 

Poverty  is  not  a  modern  nor  an  exclusively  economic 
problem,  as  some  maintain,  and,  if  we  accept  the  theory 
of  biological  variations,  it  may  be  considered  as  old 
as  organized  society  or  as  variations  in  the  human 
species.  Almsgiving  and  the  protection  of  the  poor, 
form  cardinal  obligations  of  every  religion,  and  are 
strongly  emphasized  and  urged  in  the  New  Testament 
as  well  as  in  the  Old.  Historic  records  prove  that 
the  poor  received  the  care  of  the  state  under  some  of 
the  Egyptian  dynasties  long  before  the  time  of  Moses.^ 

^  James  H.  Breasted,  "  Ancient  Records  of  Egypt,"  vol.  Ill, 
1006,  pp.  23  ff . ;  also  "Development  of  ReliRion  and  Thought  in 
Ancient  Egypt"  (same  author),  1912,  pp.  216-56. 


POVERTY,  ITS  NATURE  AND  EFFECT        3 

No  country  is  exempt  from  poverty,  whether  it  is  a 
democracy  or  an  autocracy,  whether  it  is  an  industrial 
or  an  agricultural  nation.  Poverty  is  as  evident  in 
highly  civilized  as  in  backward  countries  —  perhaps 
more  so.  It  was  encouraged  in  the  early  stages  of 
Christianity  by  the  apostles,  who  attached  a  certain 
dignity  and  spiritual  influence  to  it,  in  contrast  with 
the  materialism  and  evil  of  wealth.  It  became  the 
symbol  of  purity  and  self-abnegation,  by  means  of 
which  salvation  could  be  attained.  This  spirit  still 
survives  in  many  religious  orders. 

Whether  poverty  is  more  widespread  in  the  United 
States  than  in  Europe,  is,  in  the  absence  of  statistics, 
purely  a  matter  of  opinion,  but  the  statement  is  justified 
that  it  is  most  apparent  where  wealth  is  obtrusive,  as 
in  large  industrial  and  commercial  centers.  Poverty 
requires  the  contrasting  background  of  wealth  to  con- 
vey to  the  eye  and  to  the  mind  a  vivid  picture  of  its 
misery.  Great  as  is  the  contrast  between  the  two,  they 
are  nevertheless  inseparable  companions,  and  where 
wealth  thrives,  poverty  also  is  firmly  established.  In 
primitive  countries  where  one  standard  of  existence  is 
common  to  all,  poverty,  no  matter  how  intense,  is  ac- 
cepted as  a  perfectly  natural  state,  to  which  the  people 
are  hardened  and  accustomed,  never  realizing  that  their 
condition  can  be  improved.  Civilized  life  imposes 
much  harder  conditions  upon  society  and  upon  the 
individual  than  primitive  life.     Life's  perplexities  in- 


4  LABOR'S  CRISIS 

crease  under  it,  as  also  do  social  problems.  Poverty 
is  a  fixed  condition  and  is  kept  in  a  state  of  perma- 
nency by  the  force  of  suction  which  not  all  human 
beings  can  escape.  Some  manage  to  emerge  from  it, 
but  others  are  drawn  into  it,  and  the  flotsam  and  jetsam 
of  human  shipwrecks  keep  it  constantly  renewed.  No 
other  interpretation  can  be  made  of  the  Bible  texts 
"  the  poor  shall  never  cease  out  of  the  land  "  and  "  ye 
have  the  poor  always  with  you."  We  could  picture  a 
state  of  society  in  which  neither  wealth  nor  poverty 
operated  and  in  which  a  uniform  standard  of  living 
prevailed,  were  the  human  species  cast  in  the  same 
mold  without  any  physical  or  mental  variations.  But 
unfortunately,  not  all  human  beings  are  so  endowed  by 
nature  as  to  be  able  to  carry  on  unaided  the  struggle 
for  existence,  and  the  weaker  will  always  have  to  rely 
upon  and  be  sustained  by  the  efforts  and  achievements 
of  the  stronger. 

The  instinct  of  cooperation,  evidence  of  which  may 
also  be  observed  in  the  life  of  lower  animals,  is  the 
only  source  of  strength  for  the  weak,  and  finds  ex- 
pression, so  far  as  the  human  being  is  concerned,  in 
the  aid  and  protection  extended  by  the  state  and  by 
society  to  the  poor  and  helpless.  Cooperation  consti- 
tutes the  vital  force  not  only  of  charity  but  of  all  hu- 
man institutions,  and  without  it  organized  society 
would  cease  to  function.  By  its  operation  the  small 
and  weak  units  combine  and  form  single  and  powerful 


POVERTY,  ITS  NATURE  AND  EFFECT        5 

units.  Sustaining  and  prolonging  the  life  of  the  weak, 
cooperation  must  also  tend  to  modify  the  law  of  the 
"  survival  of  the  fittest  "  and  to  retard  its  operation. 

There  are  periods  in  the  life  of  society  when  man  be- 
comes callous  to  the  physical  suffering  of  his  fellow 
beings,  or  when  the  spiritual  welfare  of  the  individual 
becomes  the  principal  concern  of  the  state  and  of  the 
church.  But  there  are  also  periods  when  a  high  sense 
of  justice  is  aroused  in  behalf  of  the  poor  and  the 
oppressed,  and  the  betterment  of  their  condition  be- 
comes the  absorbing  aim  of  every  agency  of  organized 
society.  This  spirit  has  been  particularly  manifest 
in  recent  years,  and  probably  at  no  time  since  the 
Christian  era  have  so  many  far-reaching  reforms  been 
enacted  in  the  interest  of  the  poor,  particularly  of 
laborers,  as  in  the  past  five  decades.  The  force  of  this 
movement  is  Hkely  to  be  still  further  manifested  in  the 
next  decade,  not  solely  as  a  consequence  of  the  World 
War,  but  because  capital  also  is  recognizing  the  eco- 
nomic value  of  social  betterment  and  more  particularly 
the  fact  that  industrial  efficiency  and  industrial  sta- 
bility can  be  maintained  only  by  close  and  harmonious 
association  with  labor. 

It  is  within  the  memory  of  many  of  us  when  children 
of  tender  years  worked  in  factories  ten  to  eleven  hours 
a  day  with  only  thirty  to  forty  minutes'  intermission 
for  lunch;  when  women  worked  under  the  same 
time    schedule,    day  or   night,    as   men   and    without 


6  LABOR'S  CRISIS 

any  restriction  as  to  the  character  of  occupation;  when 
an  accident  to  a  worker  in  the  performance  of  his 
vocational  duty  was  treated  as  a  legal  question  of  con- 
tributor)^ negligence,  to  the  benefit  of  the  lawyer  and 
to  the  detriment  of  the  victim,  who  in  most  instances 
became  an  object  of  charity.  Moreover  the  standard 
of  living  has  been  raised,  and  the  poor  (excluding  of 
course  the  pauper,  who  presents  a  distinct  phase  of 
poverty)  are  better  housed,  better  nourished,  and  bet- 
ter clothed  than  they  formerly  were.  What  were  once 
considered  luxuries  of  the  rich  have  now  become  the 
necessities  of  the  poor.  Meat  at  least  once  a  day,  and 
vegetables  and  fruit  in  season  and  out  of  season,  are 
now  among  the  essentials  of  their  daily  diet.  In  the 
housing  of  the  poor  some  of  the  objectionable  features 
of  the  old  tenements  in  the  large  cities  have  been  re- 
moved, and  certain  home  comforts,  such  as  bathrooms, 
hot-water  supply,  steam  heat,  and  electric  lights,  are 
not  beyond  the  reach  of  the  better  situated  of  the  poor. 
Social  progress  in  this  country,  rapid  as  it  may  ap- 
pear, has  however  not  kept  pace  with  that  in  some  of 
the  European  countries,  where  under  a  scientific  system 
of  social  insurance  the  worker  is  protected  (with  the 
aid  of  the  state  and  the  employer)  against  almost  every 
contingency  which  makes  for  poverty.  Temporary 
and  permanent  disability,  sickness,  old  age.  unemploy- 
ment, the  care  of  the  orphan  and  the  widow,  come 
under  this  insurance  system,  which  to  a  large  extent 


POVERTY,  ITS  NATURE  AND  EFFECT        7 

relieves  the  burden  of  public  charity,  as  it  also  tends 
to  lessen  the  intensity  of  poverty.  It  is  only  a  ques- 
tion of  time  when  a  similar  policy,  which  can  no  longer 
be  considered  a  doubtful  experiment,  will  be  generally 
adopted  in  the  United  States. 

The  question  naturally  arises  whether  poverty  has 
diminished  as  a  consequence  of  the  marked  social 
progress.  According  to  some  authorities  poverty  is 
as  extensive  and  intensive  as  it  has  ever  been,  and  even 
more  so  according  to  others.^  Some  may  consider 
this  an  anomaly  in  face  of  the  evidence  that  in  many 
respects  the  condition  of  the  poor  has  been  greatly 
improved.  On  closer  analysis,  however,  it  will  be 
found  that  the  higher  living  standard  of  the  poor, 
while  it  has  modified  some  of  the  phases  or  aspects  of 
poverty,  has  not  lessened  perceptibly  either  its  extent 
or  its  intensity. 

Social  progress,  whether  it  relates  to  labor  conditions 
or  to  living  conditions,  imposes  a  tax  upon  society, 
which  is  reflected  either  in  an  increased  cost  of  living 
or  in  an  increased  cost  of  production.  The  increased 
cost  of  production  can  be  shifted,  as  it  usually  is,  to 
the  consumer,  but  the  higher  standard  of  living  can 
ultimately  be  met  only  by  greater  efforts  and  by  in- 
creased earnings  of  the  individual.  A  higher  stand- 
ard of  living,  whether  it  relates  to  the  poor  or  to  the 

1  John  A.  Hobson,  "  Problems  of  Poverty,"  third  ed.,  1896, 
p.  26. 


8  LABOR'S  CRISIS 

so-called  middle  class,  demands  greater  efforts  to  main- 
tain than  a  low  standard,  and  unless  the  earnings  are 
correspondingly  increased  to  support  the  additional 
requirements  and  the  additional  strain,  the  improved 
living  conditions  may  in  themselves  intensify  the  strug- 
gle and  become  an  important  cause  of  poverty.  Back 
of  the  wants  and  the  desires  must  be  the  power  to  sat- 
isfy them;  otherwise  they  breed  discontent  and  unrest, 
and  the  existence  of  the  poor  is  made  all  the  more  com- 
plex and  burdensome.  If  the  new  wants  are  satisfied 
at  the  cost  of  other  essentials,  a  condition  is  created 
in  which  one  evil  may  be  eliminated  and  another  sub- 
stituted, as  is  aptly  illustrated  by  the  housing  problem 
of  the  poor  in  New  York  City. 

The  wretchedness  of  the  housing  of  the  poor  in 
New  York  has  been  vividly  depicted  by  pen  and  by 
brush;  it  has  formed  an  inexhaustible  topic  for  the 
pulpit  and  for  the  stage ;  it  has  received  more  than 
any  other  manifestation  of  poverty  the  serious  attention 
and  study  of  the  leaders  in  social  science,  of  our  legis- 
lators, and  of  our  philanthropists.  As  a  result  of  this 
crystallized  sentiment  certain  rational  requirements 
have  been  placed  upon  the  construction  of  new  domi- 
ciles for  the  poorer  class,  to  correct  the  many  evils 
which  characterized  the  old  tenement  house.  The 
Report  for  19 17  of  the  Nezv  York  Tenement  House 
Department  proved,  however,  that  more  than  half  of 
the  entire  population  of  Manhattan  Island  still  dwells 


POVERTY,  ITS  NATURE  AND  EFFECT        9 

in  the  old  squalid  tenements  in  which  neither  sunlight 
nor  air  current  reaches  the  inner  rooms,  and  which  are 
devoid  of  every  home  comfort.  Owing  to  the  much 
higher  rental  of  the  so-called  "  new-law  tenement 
house "  the  poor  can  avail  themselves  of  it  only  by 
crowding  the  family  into  a  smaller  floor  space,  thus 
causing  congestion,  or  by  taking  boarders,  which  again 
adds  to  the  congestion,  not  to  mention  the  moral  risk 
which  this  makeshift  involves.  As  a  result  the  old 
tenements,  undesirable  as  they  are,  still  remain  the 
dwelling  places  of  the  poor  in  New  York. 

The  meager  w^age  of  the  laborer  demands  the  clos- 
est financial  adjustment,  and  the  least  increase  in  his 
expenditures  may  result  in  distress.  He  faces  the 
unalterable  economic  factor  in  every  attempt  he  or 
society  may  make  to  improve  his  living  conditions, 
and  if  the  betterment  entails  an  additional  expense, 
he  must  either  sacrifice  other  essentials,  or  all  of  his 
earnings  are  absorbed  in  the  cost  of  living  without 
any  savings  for  mishaps.  Not  only  those  who  are  in 
poverty  but  those  who  are  struggling  against  it  are 
unconsciously  being  drawn  into  its  very  vortex  in  the 
attempt  to  maintain  a  standard  of  existence  which  is 
not  adjusted  to  their  earnings,  and  in  which  no  pro- 
vision has  been  made  for  the  contingencies  of  life, 
like  sickness  and  temporary  unemplopment.  Any  one 
contingency,  unless  it  is  relieved  by  accumulated  sav- 
ings,—  and  the  chances  of  saving  are  lessened  with  the 


lo  LABOR'S  CRISIS 

increased    requirement, —  may    quickly    transform    a 
state  of  comfort  into  a  state  of  want. 

The  standard  of  living  is  progressive,  affecting  the 
wealthy  as  well  as  the  poor,  with  this  difference,  that 
the  new  wants  of  the  poor  originate  from  absolute 
necessity,  whereas  those  of  the  wealthy  are  mostly  im- 
posed by  environment  or  are  decreed  by  fashion  and 
never  by  absolute  necessity.  Social  progress  has  not 
narrowed  the  gulf  which  separates  the  destitute  from 
the  affluent.  Poverty,  using  the  term  relatively,  will 
lessen  in  proportion  to  the  diminishing  distance  be- 
tween it  and  wealth,  and  when  the  gap  is  closed,  the 
ideal  but  unfortunately  unattainable  state  of  society 
will  be  reached  in  which  wealth  and  poverty  no  longer 
exist. 


POVERTY  AS  RELATED  TO  LABOR 

The  poverty  problem  is  so  largely  a  labor  and  wage 
question,  that  by  popular  usage  the  term  "  laboring 
class "  has  become  synonymous  with  "  poor  class." 
Labor  may  be  said  to  be  the  recruiting  agency  for 
poverty,  and  the  ranks  of  the  latter  are  filled  with  the 
lees  and  dregs  of  labor  —  the  lazy,  the  shiftless,  and 
the  incompetent.  The  most  primitive  function  in  so- 
ciety, by  means  of  which  the  individual  is  enabled  to 
exist  without  any  special  training  or  intelligence,  is 
unskilled  labor.  This  forms  the  lowest  and  at  the 
same  time  the  largest  stratum  of  labor,  and  it  is  this 
class  which  comes  in  closest  touch  with  poverty  and 
upon  which  the  struggle  for  existence  bears  most 
heavily.  It  is  also  this  class  which  is  deeply  concerned 
in  the  labor  problem  and  transmitting  it  from  genera- 
tion to  generation  without  bringing  it  nearer  to  a 
solution. 

The  wage  is  the  return  for  the  exertion  of  labor,  and 
its  value  is  determined  by  the  purchasing  power  of 
the  circulating  medium  and  not,  as  is  the  popular  delu- 
sion, by  the  amount  received.  The  reciprocal  relation- 
ship between  the  wage  and  the  cost  of  living  is  very 
close,  and  the  one  cannot  rise  or  decline  very  mate- 

II 


12  LABOR'S  CRISIS 

rially  without  a  corresponding  movement  in  the  other, 
thus  reestabhshing  the  equiHbrium  between  the  two. 
The  force  of  the  movement  is  equally  expended  upon 
both,  and  the  cause  that  may,  for  instance,  be  respon- 
sible for  an  inflated  cost  of  living  is  also  responsible 
for  an  inflated  wage.  The  one  is  not  the  direct  result 
of  the  other,  as  is  popularly  supposed,  but  both  are 
equally  affected  by  the  same  cause,  whether  the  de- 
rangement of  our  economic  system  or  monetary  infla- 
tion or  social  progress.  Under  certain  conditions  the 
fluctuations  may  be  greater  in  the  one  than  in  the  other, 
but  eventually  the  wage  and  the  cost  of  living  adjust 
themselves  to  each  other,  with  the  result  that  in  the  end 
the  conditions  of  the  wage  earner  remains  virtually 
unchanged. 

The  minimum  wage  which  can  prevail  in  any  coun- 
try, whether  it  be  the  United  States  or  China,  is  based 
upon  the  minimum  requirements  for  sustaining  bare 
life.  Labor  would  eventually  become  extinct  and  so- 
ciety disorganized  under  "  starvation  wages,"  or  wages 
which  are  inadequate  to  support  life  under  normal 
conditions.  Labor  and  povert}'  are  often  close  com- 
panions, but  labor  and  starvation  are  incompatible. 
The  fundamental  requirements  for  sustaining  life  are 
not  influenced  Ijy  economic  conditions,  but  by  climate, 
soil,  and  habit,  and  to  some  extent  also  by  the  facili- 
ties of  communication  with  other  countries. 

The  aliment  of  each  country  is  entirely  under  the 


POVERTY  AS  RELATED  TO  LABOR  13 

influence  of  its  geographical  position.  The  food  of 
the  cold  zone  will  not,  as  a  rule,  sustain  the  life  of  the 
inhabitant  of  the  tropical  zone,  and  vice  versa.  The 
nature  and  fertility  of  the  soil  determine  the  charac- 
ter of  the  food  of  each  country.  Thus  the  main  food 
in  Ireland  is  potatoes ;  in  Italy,  cereals ;  in  Japan,  rice ; 
in  Arabia,  dates.  Where  vegetation  is  restricted,  as  in 
Norway  and  Sweden,  fish  is  the  main  food.  In  coun- 
tries favored  by  climate  and  soil  as  well  as  by  exten- 
sive means  of  communication,  as  for  instance  the 
LInited  States  or  England,  the  choice  of  food  is  wider 
and  a  diet  of  animal  and  vegetable  food  is  general 
even  among  the  poor.  Quantity,  quality,  or  character 
of  the  aliment  of  a  people  has,  however,  no  bearing 
upon  the  living  standard  so  long  as  the  food  is  ade- 
quate to  preserve  the  vitality  of  the  individual.  The 
living  standard  of  the  Arabian  is  not  lowered  because 
he  subsists  on  dates,  nor  is  the  living  standard  of  the 
workingman  in  the  United  States  raised  because  of  his 
more  substantial  and  varied  diet.  At  the  lowest  level 
of  existence  life  is  centered  upon  the  material  wants 
of  the  individual,  but  as  the  level  rises  the  mental  and 
spiritual  forces  which  actuate  a  people,  as  well  as  an 
individual,  determine  the  standard  of  life. 

Both  the  wage  and  the  requirements  for  physical  ex- 
istence may  be  lower  in  one  place  or  country  than  in 
another  and  yet  the  standard  of  living  may  be  equal 
if  not  higher.     The  white  laborer  in  the  South  has  no 


14  LABOR'S  CRISIS 

lower  standard  than  the  laborer  in  the  North,  and  yet 
not  only  is  his  wage  lower,  according  to  census  reports, 
but  owing  to  the  milder  climate  his  housing  is  cruder, 
his  food  less  substantial,  and  his  clothing  of  a  lighter 
and  cheaper  texture.  The  workingman  in  a  small 
town  averages  a  smaller  wage  and  has  fewer  require- 
ments than  the  workingman  in  a  large  city,  but  his 
standard  of  living  is  not  lower;  on  the  contrary,  by 
many  it  is  considered  to  be  higher.  Evidently  the 
wage  and  the  standard  of  living  do  not  always  run  par- 
allel, and  the  conclusion  is  also  warranted  that  the  wage 
is  not  determined  by  the  standard  of  living  but  by  the 
cost  of  living,  or  in  other  words  by  the  purchasing 
power  of  the  wage.  Aside  from  the  cost  of  living,  the 
main  wage  factors  are  supply  and  demand  and  skill 
and  productiveness  of  labor.  Tradition  and  custom 
largely  influence  the  wage,  and  they  are  also  responsi- 
ble for  wage  variations  in  different  localities  and  in 
closely  allied  trades  and  industries. 

Another  factor  which  enters  into  wage  adjustments 
is  bargaining  between  employer  and  employee,  but  this 
applies  largely  to  the  dealings  of  organized  labor  with 
organized  capital,  and  where  collective  bargaining  op- 
erates, the  wage  standard  is  subject  to  frequent  fluc- 
tuations. This  factor  is,  however,  largely  controlled 
by  supply  and  demand,  and  the  wage  standard  can- 
not be  lowered  where  work  seeks  the  laborer,  nor  can  it 
be  advanced  where  the  laborer  seeks  work. 


CHARACTERISTICS  OF  CAPITAL  AND 
LABOR 

Capital  and  labor,  interdependent  as  they  are,  act  as 
two  distinct  and  divergent  elements,  without  any  point 
of  close  contact,  without  common  aim  or  interest, 
and  often  also  without  mutual  sympathy.  They  are 
nevertheless  held  together  by  the  strongest  ties,  for 
labor  is  dependent  upon  capital  as  the  agency  which 
insures  its  existence.  Capital,  on  the  other  hand,  can 
exercise  power  and  be  of  value  only  in  conjunction 
with  labor.  The  conservation  of  labor  is  as  essential 
for  the  preservation  of  capital  as  is  the  preservation 
of  capital  for  the  conservation  of  labor.  The  basis  of 
this  relationship  is  the  wage  of  labor  and  the  profit  of 
capital,  two  opposing  interests  which  are  the  cause  of 
the  eternal  conflict  between  capital  and  labor.  This 
relationship  is  not  regulated  by  any  fixed  law,  tradi- 
tion, or  custom,  but  is  mainly  controlled  by  expediency, 
which  the  varying  economic  conditions  may  impose 
upon  the  one  side  or  the  other.  It  may  also  at  times 
be  strongly  influenced  by  outside  sentiment  and  agen- 
cies, or  by  causes  which  have  only  a  remote  bearing 
upon  the  individual  relationship  of  employer  and  em- 
ployee, as  when  a  sympathetic  strike  is  declared  with-' 

15 


i6  LABOR'S  CRISIS 

out  any  special  grievance  against  the  employer.  The 
intercourse  between  labor  and  capital  is  made  all  the 
more  complex  because  labor,  being  personal  and  hav- 
ing individual  responsibility,  does  not  come  into  direct 
contact  with  capital,  which  is  impersonal  and  invis- 
ible, delegating  its  powers  to  intermediaries  of  different 
ranks,  generally  with  limited  authority  and  divided  re- 
sponsibility. As  a  consequence  labor  is  often  actu- 
ated by  distrust  and  suspicion  and  often  also  by  re- 
sentment. 

To  the  toiler  the  w^age  is  not  merely  a  material  me- 
dium by  which  he  is  enabled  to  exist;  it  represents  to 
him  a  mighty  power  which  controls  his  destiny  and  de- 
termines whether  he  is  to  be  spared  the  pains  and  hard- 
ship of  poverty  or  be  doomed  to  a  life  of  deprivation 
and  degradation.  The  wage  is  the  source  of  his  hope 
and  his  despair,  and  all  the  human  passions  and  im- 
pulses are  strongly  aroused  in  him  when  this  main  fac- 
tor of  his  life  is  in  any  way  affected.  The  laborer  is 
strongly  human,  and  the  faults  and  merits,  the  vices 
and  virtues,  and  the  likes  and  dislikes  of  human  nature 
all  come  into  full  play  in  the  intercourse  between  labor 
and  capital.  The  laborer  is  above  all  temperamental 
and  impressionable,  therefore  particularly  subject  and 
responsive  to  the  influences  of  agitation  concerning  his 
welfare.  lie  is  as  responsive  to  considerate  treatment 
as  he  can  l>c  resentful  and  stirred  over  trivial  griev- 
ances. 


CAPITAL  AND  LABOR  17 

Capital  and  labor  form  one  operating  element,  but 
with  distinct  functions,  the  one  operating  through  the 
intellectual  powers  and  the  other  through  the  physical 
powers.  Neither  could  long  remain  donnant  or  sus- 
pend its  functions  without  destroying  or  endangering 
the  other's  existence.  Capital  is  restless  and  untiring ; 
it  can  exist  and  grow  only  by  venture  and  enterprise, 
which  create  the  opportunities  for  the  development  and 
for  the  employment  of  labor  in  every  part  of  the  world. 
Labor  is  its  instrumentality,  by  means  of  which  capi- 
tal controls  and  commands  every  economic  activity  and 
agency,  including  labor  itself.  Capital  is  actuated  in 
its  operations  and  its  ventures  by  great  imaginative 
power  and  far-reaching  vision,  and  what  may  appear 
to  the  uninitiated  as  a  hazardous  undertaking  of  capi- 
tal will,  in  many  instances,  prove  to  be  the  creation  of 
clear  reasoning  coupled  with  remarkable  foresight. 
It  transforms  the  desert  into  a  garden  by  constructing 
irrigation  dams ;  it  populates  almost  uninhabitable  re- 
gions by  building  railroads  over  every  barrier;  it 
supplies  and  regulates  existing  wants  by  transporting 
the  excess  of  one  country  to  fill  the  needs  of  another. 
But  its  operations  extend  beyond  this,  for  capital 
creates  and  imposes  upon  the  people  new  wants  and 
desires,  and  it  makes  things  indispensable  to-day  which 
but  yesterday  were  unknown  and  superfluous. 

In  contrast  to  the  unlimited  opportunities  and  activi- 
ties of  capital,  labor  is  circumscribed  in  its  operations, 


iB  LABOR'S  CRISIS 

and  its  functions  are  confined  within  the  narrow  scope 
of  physical  exertion,  which  is  its  only  qualification  and 
its  only  activity.  No  matter  how  great  the  effort  and 
how  valuable  the  service,  the  material  result  to  the 
laborer  is  expressed  in  temis  of  wage  and  not  in  terms 
of  wealth.  It  is  only  when  the  application  of  the  in- 
tellect becomes  a  strong  factor  in  the  performance  of 
his  work  that  merit  receives  recognition  and  presents 
to  him  opportunities  to  emerge  from  the  rank  and  from 
the  limitations  of  the  common  laborer.  The  wage  of- 
fers, however,  one  marked  advantage  to  the  laborer  in 
its  security  and  stability,  for  unlike  capital  and  its  in- 
come the  wage  is  not  controlled  by  the  wheel  of  chance 
and  it  assumes  no  economic  or  speculative  risk.  It 
virtually  constitutes  a  first  lien  on  income,  as  well  as 
on  the  principal  of  capital,  and,  no  matter  how  great 
the  vicissitudes  and  the  losses  of  the  latter,  the  wage  is 
not  materially  affected  except  by  widespread  indus- 
trial depression.  Physical  strength  forms  the  most 
dependable  and  serviceable  power  and  can  be  imme- 
diately applied  without  resorting  to  any  mechanical 
medium.  It  always  commands  a  market  value  and  is 
exchangeable  for  currency  in  every  part  of  the  world. 
Unlike  capital,  physical  power  cannot  be  destroyed, 
and  it  cannot  materially  lose  its  earning  power  except 
when  old  age  or  physical  disability  overtakes  the 
laborer. 


LABOR  NOT  A  COMMODITY 

Labor  is  often  called  a  commodity,  and  until  re- 
cently it  was  legally  recognized  as  such  by  our  courts, 
although  the  very  weakness  of  labor  lies  in  the  fact 
that  it  possesses  none  of  the  characteristics  and  none 
of  the  advantages  of  a  commodity.  Unlike  a  com- 
modity, it  does  not  lend  itself  to  scientific  distribution 
or  marketing.  It  cannot  be  manipulated  by  corner- 
ing nor  by  concealing  its  oversupply  with  a  view  to 
creating  a  fictitious  scarcity  or  a  fictitious  price.  Its 
surplus  can  be  reduced  only  by  curtailing  the  working 
time  or  by  a  slow  process  of  absorption,  unless  it  is 
diverted  into  foreign  channels  by  emigration,  so  as  to 
relieve  congestion  and  restore  stability  of  labor  in  the 
home  market.  Labor  and  commodity  are  analogous 
only  in  respect  to  the  operation  of  the  laws  of  supply 
and  demand,  but  even  in  this  aspect  the  analogy  does 
not  fit,  for  labor,  above  all,  is  a  living  force,  exercis- 
ing free  will  and  power.  Labor,  except  in  slavery, 
has  no  owner  and  determines  its  own  fate.  The  laws 
of  supply  and  demand  relating  to  labor  are  different 
in  spirit,  in  application,  and  in  interpretation  from  the 
laws  relating  to  commodity ;  they  are  modified  and  hu- 
manized   because    they    deal    with    a    living    force. 

19 


20  LABOR'S  CRISIS 

]\Ioreover,  the  mere  fact  that  employment  and  remun- 
eration of  labor  are  subject  to  those  laws,  does  not 
warrant,  even  in  a  popular  sense,  the  classification  of 
manual  labor  as  a  commodity.  All  human  activities 
which  serve  as  a  means  for  a  livelihood,  and  are  em- 
ployed for  a  remuneration,  except  when  distinguished 
by  special  merit  and  qualifications,  come  under  the  in- 
fluence of  the  laws  of  supply  and  demand.  This  is 
equally  true  of  the  service  rendered  by  the  lawyer, 
physician,  and  engineer,  as  it  is  of  the  manual  laborer. 
Whether  labor  is  characterized  as  a  commodity  or 
as  a  human  machine,  and  both  terms  are  in  common 
use,  the  analogies  are  as  inconsistent  and  illogical  from 
a  figurative  point  of  view  as  they  are  degrading  and 
-i-icious  when  taken  literally.  They  are  degrading  be- 
cause they  violate  the  dignity  and  affront  the  spirit  of 
labor.  They  tend  to  depreciate  the  accomplishment  of 
labor  by  reducing  it  to  the  level  of  a  mechanical  force 
and  inanimate  matter.  They  are  vicious  because  they 
serve  to  convey  a  distorted  and  unreal  picture  of  labor, 
the  most  pronounced  features  of  which  are  helplessness 
and  servitude.  In  the  hands  of  the  social  agitator 
such  a  picture  serves  as  the  most  effective  means  of 
sowing  the  seeds  of  dissatisfaction,  iml)ning  labor  with 
an  unshaken  conviction  that  it  is  a  tool  and  the  slave  of 
capital  and  a  long-suffering  victim  to  an  unjust  state 
of  society.  Labor  is  not  elevated  nor  improved  by  ex- 
aggerating its  condition ;  nor  is  the  individual  made 


LABOR  NOT  A  COMMODITY  21 

happier  by  intensifying  discontent  and  creating  a  spirit 
of  resentment  and  rebellion  against  all  social  order. 

It  may  seriously  be  questioned  whether  labor  in  this 
generation  may  still  be  justly  considered  the  stepchild 
of  society,  generally  abused  and  neglected,  and  there- 
fore demanding  special  consideration.  On  the  con- 
trary, labor  as  a  producing  power  shows  symptoms  of 
becoming  enerv^ated  and  weakened  from  an  excess  of 
attention  and  pampering,  not  only  by  those  who  are 
championing  its  cause  to  further  their  own  sordid  ends, 
but  also  by  those  who,  though  deeply  interested  in  its 
welfare,  deal  with  its  problems  emotionally  and  not 
with  calm  thought  and  judgment.  Labor  welfare  work 
is  not  always  dictated  by  social  justice,  and  it  may  even 
come  in  conflict  with  it  and  seriously  harm  society. 

The  elevation  of  labor  to  a  point  where  it  will  com- 
mand general  recognition,  materially  and  socially,  can 
be  permanently  achieved  only  by  a  slow  process  of 
evolution  and  education,  and  not  by  the  propaganda 
of  political  or  professional  agitators,  nor  by  rev- 
olutionary forces  which,  while  they  may  bring  tem- 
porary and  illusory  advantages,  eventually  destroy 
their  own  creations.  All  social  progress,  includ- 
ing labor  welfare,  if  it  is  to  become  permanently 
established,  must  have  its  source  and  its  force  not 
in  mere  popular  sentiment  and  impulse  but  in  the 
awakening  of  a  deep-rooted  consciousness  of  right 
and  justice,   and  this  is  a  moral  movement  of  slow 


22  LABOR'S  CRISIS 

growth.  Neither  the  Magna  Charta  nor  the  Bill  of 
Rights  was  a  spontaneous  creation.  The  people  of 
the  United  States,  the  land  of  justice  and  freedom,  re- 
quired a  long  period  of  education  to  arouse  them  to  a 
consciousness  of  the  injustice,  not  to  say  the  iniquity, 
of  slavery.  Vital  labor  reforms  are  slow  achievements 
of  a  crystallized  public  sentiment  and  consciousness. 
If  labor  laws  do  not  spring  from  a  profound  convic- 
tion of  an  existing  social  maladjustment,  but  serve 
merely  as  a  political  expedient,  they  lose  their  force, 
are  disregarded,   and  eventually  become  obsolete. 


COMPARATIVE  VALUE  OF  PHYSICAL 
AND  MENTAL  EXERTION 

Animal  life  can  be  sustained  and  preserved  only  by 
physical  exertion,  which  in  man  is  directed  by  the  men- 
tal faculties.  In  the  social  and  economic  organiza- 
tion of  the  human  family  physical  and  mental  exer- 
tion form  two  distinct  elements  resulting  in  manual 
labor  and  mental  work.  Which  of  the  two  con- 
tributes the  larger  share  to  the  welfare  of  society  and 
to  the  production  of  wealth?  This  subject  has  at  all 
times  been  intensely  discussed,  and  it  has  also  served  as 
the  framework  for  the  socialistic  theories  expounded 
by  Karl  Marx  and  his  followers.  Treated  purely  as 
a  biological  question,  it  cannot  be  answered  logically, 
any  more  than  can  the  question  whether  air  is  more 
eessential  to  life  than  water.  Reduced  to  economic 
terms,  it  lends  itself  by  a  brief  analysis  to  reasonable 
deductions.  The  performance  of  manual  labor  mani- 
fests itself  in  tangible  form,  it  can  be  visualized,  val- 
ued, and  measured ;  whereas  the  operation  of  the  intel- 
lect can  be  conceived  only  through  the  agencies  it  ac- 
tuates, and  is  judged  by  the  resultant  achievements. 
Manual  labor,  owing  to  the  visual  manifestation  of  the 
exertion,  appeals  to  the  imagination  and  excites  popu- 

23 


24  LABOR'S  CRISIS 

lar  sympathy.  The  mental  worker  may  "  earn  his 
bread  by  the  sweat  of  his  brow,"  and  his  mental  ex- 
ertion may  be  as  exhausting  as  the  physical  exertion 
of  the  manual  laborer,  yet  it  will  not  inspire  a  pathetic 
portrayal  nor  will  it  arouse  sympathy.  That  physical 
exertion  is  essential  to  self-preservation  is  a  funda- 
mental law,  but  without  the  aid  of  the  intellectual  pow- 
ers human  existence  would  be  precarious,  if  at  all 
possible.  It  is  the  intellect  which  is  endowed  by 
nature  with  creative,  controlling,  and  dominating  pow- 
ers, by  virtue  of  which  it  exercises  authority,  subjects 
to  its  will  all  brute  force,  makes  the  forces  of  nature 
serve  the  needs  of  man,  and  establishes  law  and  order 
in  the  human  family.  It  is  through  the  intellect  that 
physical  exertion  is  lessened  and  that  productive  power 
is  vastly  increased  by  invention  and  by  applying  scien- 
tific methods  and  principles.  It  creates  opportunities 
for  the  performance  of  labor  and  for  the  interchange 
of  the  products  of  labor,  and  establishes  trade  and  com- 
merce in  the  remotest  part  of  the  world. 

In  the  economic  struggle  for  life,  labor  is  controlled 
by  the  intellectual  powers,  and  this  natural  subordina- 
tion cannot  be  reversed  any  more  than  the  operation 
of  the  mind  can  be  subordinated  to  the  action  of  the 
limb,  except  in  a  subconscious  state.  The  mental  pow- 
ers which  enter  into  the  perfomiance  of  manual  labor 
operate  within  a  narrow  field,  and  the  opportunities 
for  their  more  extended  application  are  limited;  hence 


PHYSICAL  AND  MENTAL  EXERTION     25 

they  become  mechanical  in  their  operation.  Nor  can 
labor  exercise  both  functions  without  impairing  the  one 
or  the  other,  and  particularly  the  mental,  for  the  mind 
relaxes  under  physical  exertion.  To  relieve  mental 
strain,  the  brain  worker  tills  the  soil,  chops  wood,  or 
indulges  in  strenuous  exercise,  by  which  the  mind's 
activity  is  temporarily  checked.  The  performance  of 
manual  and  mental  labor  are  two  distinct  functions 
which  cannot  be  merged  into  one,  nor  can  they  be 
effectively  exercised  at  the  same  time.  In  other  words, 
the  laborer  is  not  qualified  to  assume  the  mental  func- 
tions of  managing,  supervising,  and  planning,  and  at 
the  same  time  to  apply  his  physical  exertion  as  a  means 
for  support.  His  existence  depends  upon  manual  ex- 
ertion. 

Labor  is  also  handicapped  in  the  economic  struggle 
by  competition  with  the  mechanical  powers,  which 
closely  encroach  upon  the  domain  of  labor  and  often 
replace  it.  Wherever  physical  exertion  is  a  factor, 
its  economic  value  is  subjected  to  a  comparative  test 
with  the  mechanical  powers,  and  only  by  operating  in 
conjunction  with  the  latter  can  labor  retain  its  value 
as  a  productive  power.  It  follows  that  the  contention 
of  labor  that  is  the  paramount  factor  in  the  production 
of  wealth,  and  is  entitled  to  a  large  share  of  the  profits 
arising  therefrom,  is  not  supported  in  the  actual  opera- 
tion of  the  economic  laws.  Four  factors  enter  into 
economic  enterprise:  capital,  labor,  intellect,  and  me- 


26  LABOR'S  CRISIS 

chanical  powers.  The  use  of  the  latter  is  made  possible 
by  the  application  of  the  intellect  which  is  an  instru- 
mentality of  capital  and  not  of  labor.  The  part  which 
mechanical  powers  play  in  the  production  of  wealth,  as 
compared  with  labor's  part,  has  received  little  atten- 
tion and  is  entirely  ignored  by  labor.  Nevertheless 
in  competition  with  labor  they  far  outrank  the  latter 
in  productive  power  and  in  stability.  In  many  in- 
stances, mechanical  power  can  and  does  replace  human 
intelligence  and  alertness,  as  for  instance  in  the  auto- 
matic signal  system,  which  replaces  the  railroad  flag- 
man. Labor  cannot  consistently  claim  profits  accru- 
ing from  agencies  other  than  its  own,  even  though  the 
agency  be  mechanical  or  impersonal,  for  they  are  in- 
struments of  capital  and  not  of  labor.  To  use  a  con- 
crete illustration :  A  mining  concern  is  enabled  by 
means  of  new  devices  or  improved  methods  of  opera- 
tion to  dispense  with  the  greater  part  of  its  labor  force, 
and  as  a  result  the  operating  cost  is  largely  decreased. 
Labor  was  not  a  factor  in  this  improvement,  which 
was  detrimental  to  its  interest  by  depriving  many  of 
employment,  and  yet,  on  the  theory  of  the  more  rad- 
ical reformers,  labor  is  entitled  to  the  benefits  of  the 
increased  profit,  even  though  the  result  is  obtained  by 
the  decreased  performance  of  labor.  The  same  prin- 
ciple is  involved  in  all  industrial  operations,  and  it 
would  seem  obvious  that  labor  itself  does  not  deter- 
rninc  profit.     Profit,  unless  speculative,  is  determined 


PHYSICAL  AND  MENTAL  EXERTION     27 

by  skill  of  management,  under  which  the  available  re- 
sources and  forces  of  an  organization,  including  labor, 
are  properly  coordinated  and  are  efficiently  applied  and 
controlled.  However  efficient  labor  and  its  control, 
it  will  not  insure  success  to  an  organization  if  the 
management  is  deficient  in  other  respects,  for  instance 
in  sound  judgment  in  buying  or  selling  or  in  extending 
credits. 

Whatever  changes  the  institution  of  capital  and  labor 
may  undergo,  it  will  always  be  actuated  by  the  one  fun- 
damental purpose  of  securing  material  benefit,  which 
each  of  the  two  parties  seeks  to  derive  from  their  joint 
operation.  The  relationship  of  the  two  parties  cannot 
be  controlled  by  a  system  of  labor  democracy,  which, 
while  it  may  level  and  democratize  economic  opportuni- 
ties, cannot  permanently  equalize  the  proper  use  of 
those  opportunities  nor  the  resulting  achievements.  A 
democracy  is  based  on  equal  rights,  but  in  economic  life 
the  rights  and  duties  of  employer  and  employee  differ, 
and  an  equality  cannot  be  established  as  long  as  super- 
vision and  authority  are  essential  in  the  operation  of 
labor  and  as  long  as  the  brain  can  achieve  more  than 
muscle. 

Vital  as  manual  labor  is  to  the  existence  of  the  hu- 
man race,  it  cannot,  for  its  own  preservation,  abolish 
the  economic  relationship  of  employer  and  employee, 
nor  can  it  permanently  release  itself  from  the  control 
of  capital  and  gain  complete  economic  independence. 


28  LABOR'S  CRISIS 

It  cannot  successfully  nor  logically  contest  the  superi- 
ority of  the  intellect  over  muscle.  Labor  has  to  rely 
upon  ethical  principles  and  upon  the  forces  of  social 
justice  to  modify  the  condition  under  which  it  exists 
by  reason  of  its  lower  rank  and  of  its  inequality.  La- 
bor can  promote  its  permanent  betterment  only  with 
the  aid  of  public  sentiment  and  by  action  of  moral 
laws.  Public  consciousness  has  been  instrumental  in 
transforming  the  relationship  of  capital  and  labor  into 
a  human  institution,  in  which  the  former  hardships 
and  disabilities  of  labor  are  no  longer  manifest,  and 
in  which  the  welfare  and  the  conservation  of  labor  are 
strong  actuating  factors. 


DEPLETION  AND  DETERIORATION 
OF  LABOR 

An  increasing  scarcity  and  a  lower  productivity  of 
labor  had  become  manifest  throughout  the  United 
States  for  some  years  prior  to  the  outbreak  of  the 
World  War,  causing  an  uninterrupted  rise  in  the  wage, 
as  well  as  in  the  cost  of  living,  as  can  be  clearly  traced 
by  statistical  data.  The  United  States  Bureau  of  La- 
bor Statistics,  in  Bulletin  24^  (published  1919),  table 
6,  page  24,  compares  as  follows  under  the  union  wage 
and  the  cost  of  food  for  a  period  of  eight  years  from 
1907  to  1 9 14,  computed  on  a  basis  of   100  per  cent. 

for  1907. 

Table  I 
Rates  of  wages    Full-time  hours    Retail  prices 
per  hour  per  week  of  food 


1907 

100 

100 

100 

1908 

lOI 

IOC 

103 

1909  . 

102 

99 

108 

I9IO 

105 

99 

113 

191 1 

107 

98 

112 

I9I2 

109 

98 

119 

I9I3 

III 

97 

122 

I9I4 

114 

97 

125 

Omitting  the  three  war  years,  191 5,  19 16,  and  19 17, 
which  are  included  in  the  original,^  the  increase  from 

^  In  order  to  base  the  deductions  upon  normal  pre-war  condi- 

29 


30  LABOR'S  CRISIS 

1907  to  19 1 4  aggregates  fourteen  per  cent,  in  the 
union  wage  and  twenty-five  per  cent,  in  the  retail 
price  of  food.  During  the  same  period  the  working 
time  of  union  labor  averaged  a  reduction  of  three  per 
cent,  a  week. 

The  following  tabulation  is  based  on  the  summaries 
of  19 14,  1909,  and  1904  relating  to  the  manufacturing 
industries  of  the  United  States,  and  was  published  in 
19 1 7  by  the  Bureau  of  the  Census  in  the  Abstract  of 
the  Census  of  Manufactures,  1914  (published  in 
1917),  pages  17-18. 

Table  II 

1914  1909  1904 

Average    number    of 

wage  earners    7fi2,^,Zi7  6,615,046  5,468,383 

Wages     $  4,078,332,433  $  3,427.037,884  $  2,610,444,953 

Value   of   products.  .$24,246,434,724  $20,672,057,870  $14,793,902,563 

According  to  these  data  the  average  annual  wage  in 
the  above  periods  was  respectively  $580,  $518,  and 
$477,  and  shows  a  total  increase  of  twenty-two  per 
cent,  in  the  ten  years  prior  to  the  war.  Incidentally 
it  may  be  pointed  out  here  that  in  view  of  the  fact  that 
the  cost  of  food  constitutes,  according  to  estimates, 
forty-three  per  cent,  of  the  total  expenditures  in  the 
budget  of  the  wage  earner's  family,  the  higher  wage 
could  not  have  improved  materially  the  economic  con- 

tioiis,  statistics  relating  to  the  period  of  the  war  are  purposely 
omitted  in  the  tables  presented  here. 


DEPLETION  AND  DETERIORATION      31 

dition  of  the  laborer,  unless  rent,  clothes  and  other 
necessary  expenditures  did  not  increase  in  cost  during 
the  period  of  ten  years  prior  to  the  war. 

The  Abstract  of  the  Census  of  Manufactures,  191 4, 
presents  also  in  table  i,  page  16,  comparative  statis- 
tical data  of  the  wage,  w'age  earners,  and  value  of 
product  for  a  period  of  fifteen  years,  figured  on  a  per- 
centage basis,  and  is  given  here  in  abbreviated  form. 

Table  III 

Percentage  of  Increase 

1909-1914         1904-1909  1889-1904 
Average     number     of     wage 

earners    6.4  21.0  16.0 

Wages     19.0  31.3  30.0 

Value    of  products 17.3  39.7  29.7 

The  diminished  rate  of  increase  in  the  three  factors 
by  which  industrial  growth  is  measured,  namely, 
amount  of  w^age,  number  of  wage  earners,  and  value  of 
products,  indicates  clearly  an  industrial  depression 
during  the  period  1909-19 14.  Statistics  are  not  avail- 
able to  establish  the  volume  of  the  product  of  all  the 
manufacturing  industries,  but  it  may  be  safely  assimied 
that  the  percentage  of  the  decline  in  rate  of  increase 
during  the  period  of  1909-1914  was  greater  in  the 
volume  than  in  value  of  the  product,  inasmuch  as  the 
increased  cost  of  labor  reflects  itself  in  the  value  and 
not  in  the  volume  of  the  product. 

Table  3  does  not  offer  any  evidence  of  labor  de- 


32  LABOR'S  CRISIS 

pletion,  for  although  the  rate  of  increase  greatly  dimin- 
ished in  the  1909-1914  periods,  this  condition  may 
be  justly  attributed  to  the  industrial  reaction.  But  if 
the  statistics  of  table  i  are  analyzed  in  conjunction  with 
the  statistics  of  table  3,  we  are  presented  with  the 
rather  remarkable  economic  phenomenon  of  an  in- 
creasing wage  coupled  wath  an  increasing  cost  of  liv- 
ing, in  the  face  of  an  industrial  depression,  which  un- 
mistakably distinguished  the  two  or  three  years  pre- 
ceding the  outbreak  of  the  w^ar  in  1914.^ 

True  to  the  reciprocal  power  which  the  wage  and  the 
cost  of  living  exert  on  each  other,  the  rise  of  twenty- 
five  per  cent,  in  the  cost  of  food  automatically  forced 
a  compensative  rise  of  twelve  per  cent,  in  the  union 
wages  and  twenty-one  per  cent,  in  the  average  of  labor 
in  general.  Neither  can  gain  a  decided  or  permanent 
ascendancy  over  the  other  without  unbalancing  the 
entire  economic  and  social  structure,  for,  if  they  were 
to  operate  independently,  the  impossible  condition 
would  be  created  under  which  the  laborer  would  either 
reach  the  point  of  starvation  or  become  a  capitalist 
owing  to  the  high  purchasing  value  of  the  wage. 

The  statistical  tabulations  presented  here  do  not, 
as  already  pointed  out,  offer  concrete  evidence  of  labor 

^ "  By  June,  1914,  llie  industries  of  New  York  State  were 
feeling  keenly  the  efTects  of  the  general  industrial  depression 
which  had  Ix-cn  developing  in  (he  United  States  for  over  a  year." 
Department  of  Labor,  State  of  New  York,  Special  Bulletin  85, 
p.  I. 


DEPLETION  AND  DETERIORATION     33 

depletion,  but  they  do  warrant  certain  deductions 
strongly  supporting  this  theory.  The  uninterrupted 
advance  in  the  price  of  food  for  a  period  of  eight  years 
prior  to  the  war  cannot  be  attributed  to  a  succession 
of  poor  harvests,  which  was  not  the  case;  nor  to  cur- 
rency depreciation  or  inflation,  which  did  not  manifest 
itself  in  an  upward  price  movement  of  other  commodi- 
ties ;  but  seems  to  have  been  due  to  an  inadequate  food 
supply.  The  increasing  shortage  of  farm  labor  has 
been  widely  recognized  for  many  years,  and  has  been 
attributed  to  the  rapid  growth  of  industrial  towns  at 
the  expense  of  rural  districts.  But  in  recent  years  the 
industrial  towns,  notwithstanding  their  constantly  in- 
creasing population,  have  also  given  strong  evidence  of 
gradual  depletion  of  the  labor  reservoirs,  not  only  in 
the  decreased  supply,  but  also  in  the  decreased  produc- 
tivity of  labor.  This  phenomenon  can  be  explained 
only  in  the  light  of  modern  labor  reforms  and  labor 
regulations.  The  vast  energies  which  have  been  with- 
drawn from  every  field  of  labor  in  consequence  of 
child  labor  laws,  of  restricting  female  labor,  of  shorter 
working  days,  of  the  increased  number  of  holidays, 
and,  by  no  means  the  least,  in  consequence  of  the 
greatly  relaxed  discipline  and  control  over  labor,  have 
greatly  reduced  the  available  supply  of  labor.  This 
condition  has  been  manifest  not  only  in  the  industries 
where  labor  shortage,  labor  inefficiency,  and  low  pro- 
duction have  been  the  general  complaint,  not  only  on 


34  LABOR'S  CRISIS 

the  farms,  where  owing  to  labor  shortage  full  advan- 
tage cannot  be  taken  of  the  opportunities  for  producing 
more  abundant  food  supplies  to  meet  the  normal  de- 
mand, but  is  also  manifest  in  the  home.  There  the 
servant  problem  has  become  a  serious  domestic  prob- 
lem, affecting  the  family  life  in  many  respects,  as  for 
instance  the  abandonment  of  the  typically  American 
dwelling,  with  the  privacy  and  exclusion  it  offers,  for 
the  multi- family  apartment  house  as  a  permanent  home 
for  the  family.  The  natural  drift  of  labor  is  toward 
employment  offering  a  maximum  wage  and  attractive 
working  conditions  and  working  hours.  Hence  an 
acute  labor  shortage  will  first  manifest  itself  and  will 
also  become  more  pronounced  in  occupations  which 
do  not  offer  those  attractions,  as  farm  and  domestic 
labor. 

The  labor  question  presents  also  a  psychological 
aspect  which  has  a  direct  bearing  on  the  supply  and 
on  the  productivity  of  labor.  The  performance  of 
labor  for  a  livelihood  is  not  a  matter  of  choice,  but  is 
impelled  by  necessity,  and  the  greater  the  pressure  of 
need  the  harder  the  task  of  labor.  The  exertion  of 
energy  in  all  animal  life,  including  that  of  the  human 
being,  is  in  response  to  want  and  necessity,  and  when 
life  can  I)c  ninintaincd  with  little  expenditure  of  en- 
ergy, as  in  jjarticularly  favored  climates,  ease  and  in- 
dolence, and  not  ])hysical  activity,  are  characteristic 
of  tlie  jx-'oplc.     Hie  love  of  rest  and  ease  is  an  ani- 


DEPLETION  AND  DETERIORATION      35 

mal  instinct,  characteristic  not  only  of  the  cattle  in 
pasture  and  of  the  beast  in  the  jungle  but  also  strongly 
inherent  in  the  human  being.  When  the  pressure  of 
necessity  is  removed  and  the  urgent  wants  are  satisfied 
with  diminished  efforts,  the  driving  power  of  labor 
also  weakens  as  a  consequence,  unless  it  is  supported 
by  some  strong  incentive,  such  as  thrift  or  ambition,  or 
new  desires  and  wants.  But  not  all  people,  either  wage 
earners  or  others,  possess  the  thrift  or  ambition  to 
provide  for  more  than  their  immediate  wants,  and 
the  incentive  for  work  is  likely  to  be  weakened  if  a 
week's  living  is  insured  by  the  labor  of  five  days. 
With  the  greater  demand  for  labor  and  with  the  higher 
earnings  and  greater  freedom  of  labor,  the  wage 
earner  is  under  less  constraint  and  under  less  necessity 
of  working  full  time  than  heretofore,  and  any  trivial 
occasion  or  attraction,  whether  it  be  a  circus  parade 
or  the  day  and  often  days  following  a  holiday,  serves 
in  many  instances  as  an  excuse  for  shirking  work. 
The  operation  of  many  industries  is  temporarily  im- 
paired if  not  suspended  on  such  occasions,  and  this  evil 
is  generally  recognized  as  an  important  factor  in  cur- 
tailed production,  as  it  is  also  a  contributory  cause  of 
labor  shortage.  It  is  probably  a  conservative  estimate 
that  the  number  of  absentees  in  all  industrial  plants 
averages    approximately    four   per    cent.^    during   the 

1  Official    statistical    data    are    not    available    to    establish    the 
average  daily  percentage  of  absent  workers  in  all  or  in  any  of 


36  LABOR'S  CRISIS 

entire  year,  which  is  equivalent  to  a  loss  of  280,000 
industrial  workers,  or  $970,000,000  in  value  of  prod- 
ucts. Every  hour  of  leisure  diverted  from  labor  either 
reduces  the  production  correspondingly  or  demands 
additional  man  pow^r  to  make  good  the  time  loss. 
The  observance  of  a  single  holiday  by  the  industrial 
workers  in  the  United  States  is  equiv^alent  either  to 
the  loss  of  labor  power  of  25,000  individuals  for  an 
entire  year  or  to  a  diminished  production  amounting 
to  $80,000,000. 

Leaving  out  of  consideration  the  abnormal  labor 
shortage  as  a  result  of  the  war,  the  facts  presented  here 
warrant  the  conclusion  that  a  gradual  drainage  of  the 
labor  reservoirs  had  been  in  process  for  many  years 
prior  to  the  war.  Adjustment  to  peace  conditions  and 
the  consequent  economic  reactions  can  have  only  a 
temporary  effect  upon  the  labor  shortage,  for  with  the 
increasing  power  of  labor  to  reduce  its  working  time 
and  to  restrict  production  the  process  of  labor  deple- 
tion will  continue.  It  is  likely  to  become  more  acute 
in  view  of  the  fact  that  prior  to  the  World  War  the 
labor  supply  in  the  United  States  had  been  replenished 

the  industries.  The  percentage  given  here  is  an  estimate  based 
upon  the  pay  rolls  of  several  concerns  and  upon  rough  estimates 
made  by  others.  The  percentage  of  absentees  varies  in  the 
difTcrcnt  industries  according  to  the  type  of  labor  employed, 
and  is  particularly  high  in  Decemlicr.  In  some  of  the  industrial 
centers  work  is  entirely  suspended  bct\vei.'n  Christmas  and  New 
Year. 


DEPLETION  AND  DETERIORATION      37 

by  the  constant  inflow  of  immigration,  which  is  likely 
to  be  greatly  restricted,  if  not  prohibited,  by  the  for- 
eign nations  as  a  measure  of  self-preservation  and 
with  a  view  of  conserving  their  own  much  depleted 
man  power.  The  possibility  must  also  be  considered 
that  newly  created  ideals  and  opportunities  in  the 
European  countries  may  attract  the  natives  who  had 
emigrated  to  foreign  lands,  and  that  many  of  those 
who  have  landed  on  the  soil  of  the  United  States  as 
immigrants  will  depart  as  emigrants.  Assuming,  how- 
ever, that  immigrants  will  be  attracted  to  the  United 
States  in  large  numbers,  restrictive  measures  will  no 
doubt  be  enacted  to  check  it,  in  response  to  public 
sentiment  and  to  the  pressure  of  organized  labor.  The 
public  attributes  the  spread  of  Radicalism  in  this  coun- 
try to  the  foreign  population ;  while  labor  unions  ad- 
vocate the  restriction  of  immigration  as  the  only  means 
of  controlling  the  labor  supply. 

The  labor  shortage  is  not  wholly  confined  within 
the  United  States,  and  it  is  spreading  to  every  country 
where  labor  is  beginning  to  assert  itself  and  is  demand- 
ing and  receiving  political,  economic,  and  social  recog- 
nition. Even  in  remote  Oriental  countries,  as  in 
Japan,  for  instance,  it  is  compelling  the  consideration 
of  radical  labor  reforms,  with  the  probability  of  their 
early  enactment  into  law.  The  European  upheaval  is 
not  only  changing  the  demarcation  lines  in  the  geo- 
graphical map  of  the  world;  it  is  not  only  revolution- 


38  LABOR'S  CRISIS 

izing  the  political  institutions  of  the  nations  by  basing 
them  on  democratic  if  not  on  what  have  hitherto  been 
termed  socialistic  principles  of  government;  but  it  is 
also  creating  a  new  social  era,  in  which  the  order  of 
society  is  being  reversed,  and  those  who  were  at  the 
bottom  are  becoming  the  ruling  power  wherever  de- 
mocracy is  having  its  first  test  and  trial. 


LABOR-SAVING  INVENTIONS  AND 
LABOR  SUPPLY 

Acute  labor  shortage  cannot  be  materially  relieved 
by  new  inventions  nor  by  the  more  extensive  applica- 
tion of  labor-saving  machinery  and  devices,  although 
it  is  the  popular  belief  that  they  tend  to  reduce  the 
demand  for  labor  by  supplanting  it  and  by  augment- 
ing production.  Labor-saving  machinery  by  increas- 
ing production  reduces  the  cost  of  the  product  and 
creates  a  larger  demand  and  a  wider  market.  The 
demand  for  the  product  is  stimulated  and  its  market- 
ing facilitated  not  only  by  the  larger  volume  but  also 
by  the  greater  speed  of  production.  An  article  comes 
into  common  use  and  ceases  to  be  a  luxury  when  it 
meets  the  requirements  of  large  production,  low  cost, 
and  speedy  delivery.  The  power  loom  and  the  spin- 
ning mule  have  not  only  increased  the  production  and 
reduced  the  cost  of  textile  fabrics  but  they  have  also 
caused  a  large  increase  in  the  demand  for  the  fabric 
as  well  as  for  textile  labor.  The  application  of  me- 
chanical power  and  devices  in  the  process  of  printing 
has,  in  proportion  to  the  output,  diminished  the  use 
of  man  power,  but  in  the  aggregate  it  has  enlarged 
the  demand  for  labor  by  largely  increasing  the  use  of 

39 


40  LABOR'S  CRISIS 

the  product.  It  is  true  that  labor-saving  machinery 
does  in  many  instances  displace  labor,  but  the  surplus 
is  fully  absorbed  in  the  industries  which  are  created 
and  expanded  in  consequence  of  the  use  of  this  ma- 
chinery and  the  resultant  lower  cost  of  the  product. 
Moreover,  the  manufacture  of  the  machinery  and  de- 
vices themselves  employs  large  forces  of  labor.  Me- 
chanical power  in  supplanting  muscle  makes  vast  de- 
mands upon  the  supply  of  labor  by  offering  increased 
opportunities  of  employment  in  the  workshops,  in  the 
mines,  in  transportation,  and  in  many  of  the  trades 
which  it  stimulates  and  creates.  It  tends  to  intensify 
the  demand  for  labor  and  not  to  relieve  it. 

It  is  equally  a  popular  fallacy  that  the  inadequate 
supply  of  necessities,  due  to  labor  curtailment,  can  be 
replenished  and  a  nonnal  production  restored  by  in- 
venting and  developing  mechanical  devices.  Inventive 
geniuses  and  revolutionary  mechanical  inventions  are 
rare,  and  it  takes  much  time  to  perfect  inventions  and 
to  secure  their  general  adoption.  Mechanical  devices 
already  in  use  reach  perfection  in  the  course  of  time, 
which  does  not  suggest  or  admit  further  improvement. 
For  instance  the  sewing  machine  of  the  present  time 
does  not  differ  materially  from  that  in  use  fifty  years 
ago.  The  power  loom  reached  the  limit  of  its  pro- 
ductive capacity  with  the  introduction  of  the  Draper 
Magazine  loom  about  twenty-five  years  ago.  The 
principle  of  spinning  yarn  has  not  changed  since  the 


LABOR-SAVING  INVENTIONS  41 

invention  of  the  spinning  mule  in  the  latter  part  of  the 
eighteenth  century,  nor  has  its  productive  work  been 
greatly  improved  in  the  past  fifty  years.  Minor  me- 
chanical inventions  and  improvements  are  constantly 
being  introduced,  but  none  of  them  have  been  of  suf- 
ficient importance  to  affect  the  labor  market  or  to  offset 
materially  the  declining  productivity  of  labor. 

The  end  of  the  nineteenth  century  marked  a  climax 
not  only  of  material  and  economic  development  and 
of  physical  exertion  of  labor  but  also  of  mechanical 
invention.  Social  progress  has  vastly  multiplied  wants 
and  demands  until  the  agencies  which  serve  it  can  no 
longer  keep  pace  with  its  rapid  strides. 


THE  MALTHUSIAN  THEORY  AS 
APPLIED  TO  LABOR 

The  depletion  of  labor  supply  appears  a  serious 
economic  as  well  as  social  problem,  because  the  de- 
creased production  does  not  result  in  a  correspondingly 
decreased  consumption.  On  the  contrary  it  is  in- 
creased, and  the  margin  between  the  two  is  widened 
in  the  course  of  time.  Increased  consumption  is 
caused  not  only  by  the  geometrical  increase  of  popu- 
lation and  by  the  natural  trend  of  society  to  increase 
its  wants  but  also  because  labor  under  prosperity  be- 
comes a  greater  consumer  and  a  smaller  producer. 
Increasing  consumption  and  decreasing  production  cre- 
ate a  problem  to  which  the  Malthusian  theory  of  in- 
creasing density  of  population  and  decreasing  means 
of  sustenance  might  be  fittingly  applied.  However, 
since  the  time  of  Malthus,  and  long  before  his  time, 
we  have  learned  to  apply  to  all  problems  relating  to 
the  existence  and  welfare  of  human  beings  the  laws 
of  compensation,  the  laws  of  adjustment,  and  the  laws 
of  necessity.  To  make  a  mental  survey  of  the  pos- 
sible effect  upon  society  of  the  exhaustion  of  labor 
power,  we  must  take  into  account  the  following  coun- 
teracting   factors:    (i)    curtailment    of    nonessential 

42 


THE  MALTHUSIAN  THEORY  43 

wants  by  a  simpler  mode  of  living;  (2)  economic  use 
and  distribution  of  labor  power;  (3)  the  enormous 
reserves  of  human  energies,  which  can  be  awakened 
and  applied  to  productive  occupation  only  by  stress  of 
circumstances  or  by  high  ideals. 

The  simpler  the  life,  the  fewer  the  wants  and  the 
less  the  opportunities  for  the  employment  of  hired  la- 
bor. Nonessentials  form  the  predominating  and  also 
the  fluctuating  wants  in  civilized  society,  increasing  or 
decreasing  in  response  to  economic  conditions.  Op- 
portunities for  the  employment  of  labor  are  created  not 
so  much  by  demands  for  necessities  as  by  wants  im- 
posed by  environment  or  acquired  by  habit  and  by  ex- 
ample. The  almost  complete  dependence  of  labor  upon 
the  production  of  nonessential  commodities  can  be  ap- 
preciated if  we  take  as  an  example  the  manufacture 
of  tobacco,  which,  according  to  the  Abstract  of  the 
Census  of  Manufactures,  19 14  (pp.  31,  48,  222), 
gives  employment  to  178,872  wage  earners  in  the 
United  States  alone,  whereas  only  124,052  wage  earn- 
ers are  required  in  bakeries  to  supply  the  population 
of  the  United  States  with  bread  and  bakery  products, 
including  crackers.  What  is  generally  classed  as  an 
essential  may  become  a  nonessential  product  by  the 
purpose  it  serves.  For  instance,  wearing  apparel 
when  manufactured  not  solely  for  the  needs  of  life  but 
in  response  to  fashion  or  to  individual  fads,  ceases  to 
be  an  essential  product.     The  same  is  true  of  corn, 


44  LABOR'S  CRISIS 

rye,  and  barley  when  they  are  used  for  distilling  and 
brewing,  and  of  any  other  product  which  enters  into 
the  manufacture  of  a  nonessential  commodity  or  serves 
a  nonessential  purpose.  It  is  obvious  that  if  civilized 
society  were  forced  to  revert  to  simpler  life  and  habits, 
the  industries  of  the  entire  world  would  become  para- 
lyzed and  the  employment  of  hired  labor  would  be  re- 
duced to  a  minimum.  That  the  individual  can  dis- 
pense, without  affecting  his  well-being,  with  things 
which  add  to  his  comfort,  pleasure,  and  satisfaction, 
may  be  safely  assumed,  and  it  is  only  when  he  is  de- 
prived of  the  essentials  for  sustaining  life  that  suf- 
fering and  hardship  result. 

Continued  labor  shortage  will  also  compel  a  more 
economical  use  and  distribution  of  labor.  It  will  do 
away  with  most  of  the  domestic  labor,  which  cannot 
be  economically  utilized  in  a  small  family  group.  The 
service  of  the  cook  or  waitress  has  more  economic  labor 
value  in  a  public  eating  place  than  in  the  employ  of 
the  family.  The  labor  power  of  the  family  chauffeur 
is  largely  wasted  by  many  hours  of  inactivity,  but  ap- 
plied to  productive  service  this  power  becomes  a  vital 
labor  factor.  Labor  wastage  caused  by  seasonal  oc- 
cupation in  certain  trades  and  industries  which  impose 
upon  the  worker  long  spells  of  idleness,  is  preventable 
by  anticipating  seasonal  wants  and  providing  uninter- 
rupted emplovTnent.  How  much  productive  power  is 
wasted  by  strikes  must  be  left  to  the  imagination,  but 


THE  MALTHUSIAN  THEORY  45 

that  compulsory  arbitration  of  the  issues  between  cap- 
ital and  labor  is  becoming  a  national  necessity  and  that 
it  would  greatly  relieve  labor  shortage,  cannot  be  rea- 
sonably questioned. 

When  the  depletion  of  the  labor  supply  reaches  an 
acute  stage,  new  sources  of  labor  energies  will  be 
created,  which  under  normal  conditions  remain  dor- 
mant or  are  applied  to  non-muscular  occupations. 
The  World  War  has  demonstrated  that  most  effective 
labor  power  can  be  created  from  the  residue,  and  we 
might  say,  from  the  sediment  of  a  population,  after 
the  departure  of  the  physically  strongest  and  fittest, 
upon  whom  the  functions  of  labor  devolve  in  times  of 
peace.  It  has  demonstrated  that  this  untrained  force 
can  develop  mighty  powers,  which  can  cope  with  the 
enormous  requirements  of  war  and  at  the  same  time 
supply  the  wants  of  the  civilian  population. 

The  war  has  also  demonstrated  the  adaptability  of 
the  human  being  to  every  condition  if  moved  by  ne- 
cessity, by  a  high  reward,  or  by  high  ideals,  for  only 
under  those  conditions  is  the  highest  level  reached  in 
the  powers  of  endurance  and  resistance,  in  the  applica- 
tion of  energy  and  human  ingenuity,  and  in  the  prac- 
tice of  self-denial  and  self-reliance.  These  forces 
come  into  full  action  in  every  human  crisis,  and  prove 
an  aid  and  a  safeguard  in  the  struggle  for  existence, 
by  overcoming  or  removing  danger,  or  by  adjusting 
the  individual  to  the  conditions  which  threaten  his  ex- 


46  LABOR'S  CRISIS 

istence.  The  same  forces  will  assert  themselves  when, 
according  to  the  Malthusian  theory,  the  soil  and  the 
product  of  the  soil  shall  no  longer  be  adequate  to  sup- 
port the  congested  population  of  the  earth,  or  when  la- 
bor becomes  so  exhausted  that  its  products  prove  in- 
adequate to  meet  the  normal  requirements  of  society. 
In  either  case,  the  cause  itself  will  provide  the  antidote 
and  lead  to  the  restoration  of  equilibrium  between  con- 
sumption and  production  long  before  the  existence  of 
society  is  seriously  menaced.  An  acute  labor  short- 
age will  lessen  the  demand  for  labor,  as  well  as  for  its 
products;  it  will  stimulate  self-help  and  mutual  help; 
it  will  encourage  self-denial  and  it  will  cultivate  simpler 
habits  and  simpler  tastes  by  curtailing  many  of  the 
nonessentials  in  life  which  are  acquired  for  the  sake  of 
appearance  or  through  the  demands  of  fashion,  habit, 
and  example.  Moreover,  when  labor  offers  greater 
earning  opportunities  with  less  effort  and  with  fewer 
hours  of  work  than  other  vocations,  its  ranks  will  be 
replenished  from  every  walk  of  life.  With  the  in- 
centive of  a  high  reward  and  under  stress  of  individual 
necessity,  the  clerk,  the  teacher,  the  actor,  and  even 
the  woman  of  fashion,  apply  their  untrained  hands 
quite  effectively  to  labor,  whether  it  be  in  the  produc- 
tion (jf  ammunition  or  the  construction  of  ships  or  the 
tilling  of  the  soil,  as  the  war  has  conclusively  demon- 
strated. That  the  pressure  of  consumption  upon  pro- 
duction will  give  rise  to  new  labor-saving  inventions 


THE  MALTHUSIAN  THEORY  47 

may  be  taken  for  granted,  but  the  demand  for  man 
power  will  not  be  lessened  thereby,  for  the  general 
effect  of  labor-saving  machinery  on  the  supply  of 
labor,  as  has  been  already  explained,  is  twofold,  it 
dislocates  labor  and  it  is  also  instrumental  in  providing 
it  with  new  employment. 

After  making  full  allowance  for  all  the  counteract- 
ing forces  which  may  mitigate  the  labor  depletion, 
the  effect  upon  society  must  nevertheless  prove  serious, 
for  permanent  labor  contraction  can  be  offset  only  by 
a  corresponding  curtailment  in  the  wants  of  the  people 
and  by  lowering  the  standard  of  living.  A  high  stand- 
ard of  living  cannot  be  long  maintained  when  labor 
becomes  impotent  and  inadequate  to  support  it.  The 
housing  becomes  inadequate  and  its  physical  upkeep 
neglected;  as  regards  clothing,  quality  is  lowered, 
choice  is  restricted,  wear  is  prolonged.  Comforts  and 
conveniences  are  sacrificed  and  order  and  cleanliness 
are  disregarded,  in  order  to  utilize  the  physical  en- 
ergies for  more  essential  needs.  Esthetic  taste  be- 
comes neglected,  and  the  beautiful  and  ornamental  give 
way  to  the  simple  and  the  crude.  Under  permanent 
and  pronounced  labor  contraction,  luxuries  of  yester- 
day will  no  longer  become  common  wants  of  to-day, 
nor  will  the  requirements  of  society  be  merely  matters 
of  individual  choice  and  taste,  but  will  be  determined 
by  the  disposition  and  ability  of  labor  to  satisfy  them. 
The  pendulum  swing  of  material  and  economic  prog- 


48  LABOR'S  CRISIS 

ress  will  be  retarded  and  will  adjust  itself  to  the  weak- 
ened powers  which  control  its  movement.  Human 
progress  has  been  made  possible  through  physical  ex- 
ertion, and  when  this  vital  force  is  weakened,  retro- 
gression begins  and  does  not  stop  its  downward  course 
until  it  reaches  the  plane  corresponding  with  the  cur- 
tailed performance  of  labor. 


MAXIMUM  EFFORT  THE  FOUNDATION 
OF  SOCIETY 

Society  rests  on  certain  fundamental  principles  and 
demands  above  all  else  that  each  individual  shall,  for 
his  own  preservation  as  w^ell  as  for  the  preservation  of 
society,  render  the  full  measure  of  service  for  which 
he  is  mentally  and  physically  qualified.  All  accom- 
plishment and  attainment  are  based  on  the  full  utiliza- 
tion and  exertion  of  the  powers  with  which  the  human 
being  is  endowed.  Retrogression  and  decadence  are 
the  result  of  relaxed  effort  and,  however  abundant  the 
resources  of  a  country  or  however  prolific  its  soil, 
stagnation  and  poverty  will  characterize  the  people 
and  the  country  if  the  individual  does  not  exert  him- 
self. With  unstinted  and  unrestricted  labor  even  the 
desert  can  be  turned  into  a  garden  spot,  and  the  people 
are  happy  and  contented  though  they  labor  to  the  limit 
of  physical  endurance.  "  Labor  if  it  were  not  neces- 
sary to  the  existence  would  be  indispensable  to  the 
happiness  of  man."  A  primitive  state  of  society  may 
be  maintained  on  a  minimum  application  of  physical 
and  mental  power,  but  the  complex  mechanism  of  a 
civilized  state  demands  maximum  exertion,  physical 
as  well  as  mental. 

49 


so  LABOR'S  CRISIS 

The  tenets  of  every  religious  belief  and  the  laws  of 
every-  civilized  land  enjoin  but  one  day  of  rest  in  a 
week's  labor,  and  the  one  day  of  rest  and  the  six  days 
of  labor  are  embodied  and  emphasized  in  the  Ten  Com- 
mandments. Although  the  weekly  time  division  of 
labor  and  of  rest  has  been  authoritatively  established 
from  time  immemorial,  the  daily  hours  of  labor  have 
never  in  the  past  been  restricted  or  regulated  by  canon 
or  by  law ;  they  have  been  controlled  and  determined  by 
the  sun,  by  the  needs  of  the  people,  by  custom,  and  by 
geographical  and  climatic  conditions.  Fewer  hours  of 
daily  labor  and  less  physical  exertion  are  required  to 
maintain  life  in  the  tropical  zones  and  in  fertile  regions 
than  in  the  temperate  zones  and  in  barren  regions. 
Daylight  still  determines  and  limits  the  time  of  agri- 
cultural and  pastoral  labor,  but  with  the  introduction 
of  improved  artificial  light  and  the  establishment  of 
factory  labor  in  the  latter  part  of  the  eighteenth  cen- 
tury, the  restriction  which  nature  imposed  upon  in- 
door labor  was  removed,  and  the  daily  number  of 
hours  of  labor  became  largely  an  economic  question 
which  entered  into  the  cost  of  production.  The 
greater  the  number  of  hours  of  labor  and  the  more 
hours  a  manufacturing  plant  is  operated,  the  lower 
the  cost  of  production;  and  keen  competition  set  up 
its  own  labor  laws,  in  which  the  humane  aspect  re- 
ceived little  consideration.  Labor  welfare,  labor  con- 
servation,  labor  efficiency,  and  the  many   social  and 


MAXIMUM  EFFORT  51 

economic  theories  which  are  now  being  advanced  ef- 
fectively in  favor  of  labor  curtailment,  did  not  then 
carry  the  force  to  create  a  strong  public  sentiment  for 
improving  labor  conditions.  The  task  which  was  im- 
posed upon  the  laborer  was  determined  by  the  limit 
of  human  endurance  and  was  made  all  the  harder  be- 
cause of  the  inhuman  living  and  working  conditions. 
The  regular  daily  working  time  in  the  nineteenth 
century  was  eleven  to  fourteen  hours  in  most  of  the 
industries,  and  this  time  schedule  applied  to  man, 
woman,  and  to  the  working  child  as  well.  Nor  was 
the  strain  of  labor  lessened  with  the  introduction  of 
mechanical  power  and  with  the  operation  of  labor- 
saving  machinery.  The  running  of  a  sewing  machine 
is  no  less  a  strain  on  the  operator  than  is  the  ap- 
plication of  the  needle  by  hand.  Human  energy  is  no 
longer  the  motive  power  of  the  loom,  but  the  work 
of  the  weaver  is  nevertheless  intensified,  not  only  by 
operating  a  greater  number  of  looms,  and  by  the  more 
complex  construction  and  operation  of  the  loom,  but 
also  by  the  physical  environment  under  which  he  or 
she  labors.  Mechanical  power  and  devices  have  in- 
creased productiveness  of  factory  work  and,  while 
they  lessen  the  demands  upon  human  muscle,  they 
make  increased  demands  upon  vigilance  and  alertness, 
and  the  nervous  strain  is  all  the  greater  in  consequence. 
The  monotony  of  labor  resulting  from  the  operating 
of  power  machinery  and  from  specialization  of  labor 


52  LABOR'S  CRISIS 

increases  the  task  and  the  tedium  of  the  long  working- 
day.  The  laws  of  nature  set  certain  restrictions  upon 
the  performance  of  labor,  for  when  it  is  operated  to 
the  point  of  exhaustion  it  has  reached  the  extreme 
limit  of  maximum  labor,  and  it  ceases  to  be  a  social 
advantage  or  an  economic  gain. 

A  balanced  operation  of  labor,  marked  neither  by 
excessive  nor  by  inadequate  daily  work  —  both  con- 
stitute social  evils  —  can  be  determined  by  the  resultant 
efficiency,  which  in  turn  is  reflected  in  the  production. 
Where  increased  efficiency,  as  the  result  of  the  shorter 
working-day,  stimulates  production  and  offsets  the 
decreased  operating  time,  labor  curtailment  proves  a 
benefit  to  all  concerned,  including  the  state.  On  the 
other  hand,  labor  curtailment  becomes  a  pronounced 
evil  to  society,  even  though  it  may  prove  a  benefit  to 
labor,  when  production  is  seriously  affected  and  in- 
creased efficiency  is  no  longer  a  material  factor  in 
stimulating  the  production  to  offset  the  time  loss. 
When  that  condition  arises,  and  the  demand  for  the 
necessities  of  life  exceeds  the  supply,  the  entire  social 
and  economic  organization  becomes  strained  and  dis- 
torted, and  a  lowering  in  the  standard  of  living  is  one 
of  the  inevitable  consequences. 


ECONOMIC  EFFECT  OF  CURTAILED  LABOR 

While  the  working-day  of  eleven  to  fourteen  hours 
seriously  affected  the  well-being  of  the  laborer,  it  did 
not  promote  the  interest  of  the  manufacturer,  as  is  the 
prevailing  theory.  The  vast  industrial  development 
of  the  nineteenth  century  increased  the  struggle  of  the 
producer  for  his  economic  existence,  for  the  greater 
the  production  and  the  productive  facilities,  the  keener 
the  competition  and  the  lower  the  profit.  Whereas 
the  long  working-day  creates  an  abundance  of  labor 
and  its  products,  the  short  working-day  contracts  both, 
with  the  result  that  competition  is  lessened,  profits  are 
raised,  and  the  consumer  is  taxed  for  both  the  increased 
leisure  of  the  laborer  and  the  increased  profits  of  the 
producer. 

The  labor  reforms  which  distinguished  the  latter 
part  of  the  nineteenth  century  further  curtailed  the 
long  working-day  and  resulted  in  establishing  in  some 
industries  a  nine-hour  and  in  others  a  ten-hour  work- 
ing-day. Under  the  persistent  pressure  of  organized 
labor,  the  eight-hour  working-day  has,  however,  made 
rapid  progress  in  recent  years  and,  besides  being  recog- 
nized in  all  Federal,  State,  and  Municipal  departments, 
it  is  being   forced  upon  all  industries  by  means  of 

53 


54  LABOR'S  CRISIS 

strikes  or  threats  of  strikes.  The  movement  has  the 
active  support  of  some  of  the  leading  statesmen  and 
social  reformers,  on  the  theory  that  a  standard  eight- 
hour  working-day  is  essential  in  the  interest  of  health, 
life,  and  contentment  of  the  laborer.  Moreover  it  is 
contended  that  a  shorter  working-day  will  not  only 
benefit  the  laborer  physically,  mentally,  and  morally, 
but  that  it  will  promote  higher  efiiciency,  and  that  more 
intensive  work  will  compensate  reduced  working  time. 

Labor  scarcity  invests  labor  with  greater  power  and 
the  demands  of  labor  multiply  with  the  weakened  re- 
sistance on  the  part  of  the  employer,  who  is  reimbursed 
for  the  additional  cost  by  raising  the  selling  price  of 
the  product.  Not  that  all  the  demands  are  unjust, 
but  many  spring  from  the  prevailing  widespread  labor 
unrest,  which  breeds  unreasonable  demands.  What 
is  popularly  termed  "  labor  unrest  "  is  translating  into 
action  labor's  awakened  consciousness  of  power  and 
importance,  and  is  likely  to  result  in  revolutionizing 
the  entire  social  fabric  and  placing  it  upon  new  po- 
litical and  economic  principles. 

The  labor  reforms  of  the  past  four  decades  have 
caused  an  enonrious  contraction  of  the  productive 
powers  and  of  the  supply  of  labor.  The  economic  re- 
sults due  to  the  displacement  of  child  la1)or,  restriction 
upon  woman  ]a1)()r,  and  curtailment  of  hours  of  daily 
labor  reflect  themselves  in  higher  wages,  labor  scarcity, 
decreased  production,  and  enhanced  cost  of  produc- 


CURTAILED  LABOR  55 

tion.  The  effect  of  the  child  labor  laws  must  in  the 
absence  of  complete  statistical  data  be  left  to  conjec- 
ture. That  it  greatly  increased  and  strained  the  de- 
mand for  adult  labor  may  be  reasonably  deduced  from 
the  fact  that,  according  to  the  Abstract  of  the  Census 
of  Manufactures,  1914  (published  in  1917),  only  121,- 
yy2>  children  under  the  age  of  sixteen  were  employed 
in  all  the  manufacturing  industries  of  the  United 
States,  whereas  until  the  latter  part  of  the  nineteenth 
century  the  employment  of  children  was  common  in 
all  industries. 

The  agitation  for  a  forty-four-hour  week,  and  even 
for  one  of  thirty  hours,  is  rapidly  gaining  ground  in 
the  United  States  and  in  England,  and  not  incon- 
sistently, for  the  same  reasons  which  are  advanced 
for  an  eight-hour  day  can  with  equal  force  be  applied 
to  a  still  shorter  working-day  or  working  week.  The 
far-reaching  economic  as  well  as  social  effect  of  a 
standard  eight-hour  work-day  and  Saturday  half  holi- 
day can  be  visualized  if  the  fact  is  taken  into  con- 
sideration that  two  hours  less  of  daily  labor  are  equiva- 
lent to  the  loss  of  more  than  1,400,000  laborers  in  the 
manufacturing  industries,  which  represent  only  the 
smaller  part  of  the  labor  force  of  the  United  States. 
If  to  the  7,036,337  wage  earners  in  the  manufacturing 
industries  in  1914  (see  Table  2,  page  30)  are  added 
the    13,624,027    engaged    in     1910^    in    agriculture, 

1  United  States  Census  Report  of  1910,  vol.  iv,  p.  40. 


56  LABOR'S  CRISIS 

forestry,  animal  husbandry,  and  extraction  of  miner- 
als, or  a  total  of  20,660,364  wage  earners,  the  dif- 
ference between  an  eight-  and  a  ten-hour  working-day 
is  equivalent  to  a  loss  of  4,132,073  workers;  while  if  a 
standard  forty-hour  week  should  prevail,  as  is  being 
advocated  in  some  industries,  the  loss  as  compared 
with  a  six-hour  week  would  equal  6,886,788.  Con- 
verted into  money  value,  the  reduction  of  the  daily 
hours  of  labor  from  ten  to  eight  is  equivalent  to  a 
shrinkage  in  the  products  of  the  manufacturing  indus- 
tries of  the  United  States  approximating  $4,800,- 
000,000  annually,  or  twenty  per  cent,  of  the  total  value 
of  the  manufactured  products  in  19 14,  which  amounted 
to  $24,246,434,724  (see  Table  2,  page  30). 

The  shorter  workday,  according  to  the  theory  of  its 
supporters,  results  in  increased  labor  productivity  and 
counteracts  the  effects  of  curtailed  time.  But  this 
must  be  accepted  with  considerable  reservation,  for 
the  further  removed  the  worker  is  from  the  long  work- 
day which  previously  prevailed,  the  less  is  the  gain  in 
efficiency  and  productivity  by  further  reduction  of 
hours.  The  average  laborer  will  demonstrate  greater 
productivity  in  a  ten-  than  in  a  twelve-hour  workday, 
but  the  same  proportionate  results  are  not  obtained  in 
nine  hours  and  still  less  in  eight. ^     On  the  contrary, 

^  National  Industrial  Conference  Board,  Research  Rcj^ort  No. 
12  (Hours  of  ll'oric  as  Related  to  Output  and  Health  of  Work- 
ers—  Wool  Manufacturers),  Boston,  1918,  page  20,  contains  the 


CURTAILED  LABOR  57 

reduction  of  working  time  beyond  a  certain  normal  is 
likely  to  promote  inefficiency,  and  this  effect  can  be 
observed  in  any  individual  performing  only  a  short 
day's  work,  whether  physical  or  mental.  The  human 
machine,  like  the  mechanical  machine,  produces  the 
best  results,  not  when  operated  below  its  normal  but 
at  its  normal  capacity.  Moreover,  efficiency  is  largely 
an  individual  characteristic;  some  relax  or  become  ex- 
following  conclusions  regarding  the  effect  of  the  54-hour  week 
on  the  woolen  industry : 

"  In  the  case  of  the  54-hour  group  a  much  broader  basis  of 
experience  is  available.  This  group  includes  68  establishments 
and  over  57,000  employees.  Six  establishments  reported  that 
output  was  increased ;  7  others  that  it  was  maintained ;  55  that 
it  was  decreased.  The  13  establishments  maintaining  or  increas- 
ing production,  however,  included  less  than  7%  of  the  total 
number  of  workers  in  this  group.  The  results  indicate  that 
the  54-hour  week  has  unquestionably  placed  a  burden  on  the 
industry  from  a  production  standpoint.  The  fact  that  so  many 
establishments  report  a  decrease  in  output,  makes  it  reasonably 
clear  that  the  54-hour  week  does  not  give  maximum  output." 

The  effect  of  the  shorter  days  on  the  metal  manufacturing 
industries  is  shown  in  the  following  report  issued  by  the  Na- 
tional Industrial  Conference  Board  and  published  in  the  press 
on  June  30th,  1919:  "It  was  possible  for  a  considerable  propor- 
tion of  establishments  to  maintain  production  on  a  schedule  of 
fifty  hours  a  week,  but  that  such  schedule  could  not  be  uni- 
versally adopted  by  these  industries  without  some  loss  of  pro- 
duction." Of  the  forty-eight-hour  week  the  report  said:  "If 
both  management  and  workers  could  actively  cooperate,  such  a 
week  might  prove  practicable  in  a  larger  number  of  establish- 
ments than  is  now  the  case.  But  unless  such  cooperation  is 
secured  there  can  be  little  question  that  the  general  adoption 
of  a  forty-eight  hour-week  in  the  metal  trades  WQuld  involve; 
a  serious  economic  loss  to  the  nation." 


58  LABOR'S  CRISIS 

hausted  after  a  few  hours  of  labor,  others  can  main- 
tain it  under  all  normal  working  conditions.  It  is  a 
matter  of  public  record  that  in  the  operation  of  the 
war  industries,  including  ship-building,  increased  pro- 
duction depended  on  increasing  working  time  beyond 
the  prescribed  eight-hour  day,  and  as  a  result,  "  over- 
time "  with  an  inflated  wage  became  an  established 
feature  and  a  national  necessity.  Practical  experience 
in  this  instance  has  conclusively  demonstrated  that 
eight  hours  will  not  equal  nine  hours,  much  less  ten 
hours  of  work,  except  in  certain  industries  which  im- 
pose great  strain,  and  what  could  not  be  accomplished 
under  the  stimulus  of  the  war  spirit  is  even  less  likely 
to  take  place  under  normal  conditions. 

Labor  efficiency  is  not  generally  manifest  after  a 
day  of  rest;  on  the  contrary,  in  many  of  the  manufac- 
turing industries  Monday  or  the  day  following  a  holi- 
day is  considered  the  poorest  productive  day  in  the 
week.  The  theory  of  increased  working  efficiency  by 
reason  of  reduced  daily  hours  of  labor,  receives  sup- 
port only  in  certain  special  industries  and  under  cer- 
tain conditions.  Decreased  efficiency  becomes  a  ma- 
terial factor  when  physical  endurance  is  weakened,  and 
this  condition  is  influenced  not  only  by  time  but  more 
1)V  the  nature  of  the  work,  by  the  working  environ- 
ment, and  by  the  living  conditions  of  the  laborer. 
Mere  fatigue,  however,  unless  it  reaches  a  state  of 
exhaustion,  does  not  seriously  affect  efficiency,  for  will 


CURTAILED  LABOR  59 

power  and  endurance  stimulate  the  energies  which  may 
become  temporarily  relaxed  by  fatigue.  Without  will 
power  and  endurance,  individual  labor  efficiency  re- 
mains on  a  low  level,  notwithstanding  the  shorter 
workday.  Some  occupations  involve,  however,  great 
physical  and  mental  strain,  and  when  an  overstrained 
condition  of  mind  or  body  is  reached  in  the  course  of 
a  day's  work  efficiency  begins  to  lessen.  The  effect  of 
the  difference  in  the  degree  of  strain  and  exertion  to 
which  individual  workers  are  subjected  is  clearly  illus- 
trated by  the  personnel  of  a  railroad  train,  the  engineer 
and  fireman  of  which  will  in  the  course  of  their  day's 
work  reach  a  point  of  physical  exhaustion  long  before 
the  conductor  or  brakeman  feels  the  effect  of  his  work. 
An  eight-hour  workday  may  be  reasonable  and  neces- 
sary in  the  one  case,  but  in  the  other  seems  entirely 
unwarranted  from  the  standpoint  of  physical  exhaus- 
tion. The  needle  worker  in  the  crowded  workshop, 
whether  a  machine  or  hand  operator,  will  become  ex- 
hausted and  lose  in  efficiency  with  fewer  hours  of 
daily  labor  than  an  outdoor  laborer,  whether  a  farmer, 
bricklayer,  or  street-cleaner.  A  standard  workday 
does  not,  however,  differentiate  between  vocations 
which,  in  the  interest  of  health  and  efficiency,  may  de- 
mand a  short  day's  work,  and  those  in  which  a  longer 
day's  work  can  be  performed  without  apparent  detri- 
ment to  health  and  efficiency. 

In  most  of  the  industries  affected  by  an  eight-hour 


6o  LABOR'S  CRISIS 

limit,  increased  efficiency  is  a  negligible  factor,  and 
either  an  increased  pay  roll  or  a  decreased  production 
nearly  proportionate  to  the  decreased  number  of  work- 
ing hours  has  been  the  economic  result.  To  offer  a 
concrete  example:  After  the  enactment  of  the  Fe- 
male Labor  Law  in  the  State  of  New  York,  the  textile 
mills  operating  looms  with  female  weavers  suffered  a 
loss  in  production  nearly  proportionate  to  the  cur- 
tailed operating  time.  In  order  to  restore  the  pro- 
duction, male  weavers  had  to  replace  female  weavers 
wherever  practicable,  or  the  looms  as  well  as  the  fe- 
male weavers  had  to  be  increased  in  number  in  the  ratio 
of  the  decreased  operating  time.  In  many  indusfries 
speed  and  efficiency  of  the  machine  is  the  controlling 
factor  of  production,  which  cannot  be  increased  by 
more  intensive  work  by  the  operator.  Moreover,  in- 
tensive labor  performed  in  a  short  workday,  demand- 
ing maximum  effort  and  exertion,  may  prove  as  detri- 
mental to  the  health  of  the  operator  as  relaxed  labor 
in  a  long  workday. 

Irrespective  of  efficiency,  which  is  determined  by  a 
number  of  factors,  it  is  generally  recognized  that  the 
workday  of  the  manual  laborer  should  be  neither  so 
long  as  to  endanger  his  welfare  nor  so  short  as  to  en- 
danger common  welfare.  As  already  pointed  out,  the 
exertion  and  strain  of  labor  varies  greatly  according 
to  the  character  of  the  occupation,  and  hence  cannot 
be  standardized,  except  as  to  specific  occupations.     A 


CURTAILED  LABOR  6i 

standard  workday  arbitrarily  applied  to  all  labor  ir- 
respective of  exertion  and  of  sex,  does  not  seem  logical, 
nor  does  it  entirely  meet  the  humane  aspect.  If  the 
daily  hours  of  labor  are  to  be  influenced  solely  by 
humane  principles,  the  workday  should  discriminate, 
for  instance,  between  the  coal  miner  and  the  plumber 
or  house  painter.  The  work  of  the  former  involves 
not  only  greater  exertion  than  that  of  the  latter,  but 
also  greater  danger  to  health  and  life,  not  considering 
the  fact  that  the  work  is  performed  under  the  surface 
of  the  earth  and  under  unnatural  surroundings.  In- 
stead of  a  basic  workday  for  all  labor,  it  would  seem 
more  just  that  the  character  of  the  work  shall  differ- 
entiate and  determine  the  daily  working  hours,  con- 
sistent with  the  welfare  of  the  laborer  and  of  society. 

Where  labor  is  abundant  and  the  maximum  utiliza- 
tion of  the  mechanical  equipment  as  well  as  maximum 
production  are  the  main  factors  of  economic  operation, 
a  standard  six-hour  labor  day,  with  full  pay,  may  offer 
decided  advantages  over  the  eight-hour  day  to  the  em- 
ployer as  well  as  to  the  employee.  It  permits  the  em- 
ployment of  two  shifts  of  labor,  without  resorting  to 
night  work ;  the  one  working  from  7  a.  m.  to  i  p.  m. 
and  the  other  from  i  p.  m.  to  7  p.  m.  The  application 
of  individual  human  energy  is  lessened  thereby  by 
twenty-five  per  cent.,  whereas  the  operation  of  the 
mechanical  power  is  increased  fifty  per  cent.  While 
the  cost  of  labor  per  day  for  two  shifts  with  full  pay 


62  LABOR'S  CRISIS 

is  doubled,  production  under  twelve  hours'  operation  of 
the  plant  is  increased  fifty  per  cent,  and  overhead 
charges  are  decreased  thirty-three  and  a  third  per  cent. 
The  higher  cost  of  labor  under  a  six-hour  workday  is 
offset:  (a)  by  increasing  the  operation  and  use  of  the 
mechanical  power;  (b)  by  decreasing  the  percentage 
of  overhead  charges;  (c)  by  the  additional  profit  from 
the  increased  volume  of  business.  In  some  occupa- 
tions higher  labor  efficiency  will  be  attained  under  a 
six-hour  than  under  an  eight-hour  workday.  Whether 
the  plant  is  being  operated  eight  or  twelve  hours  a 
day,  or  whether  its  production  is  fifty  per  cent,  below 
the  normal,  the  principal  overhead  charges,  as  interest 
on  the  capital  investment,  taxes,  power  and  clerical 
salaries  remain  virtually  the  same.  Just  as  the  cost 
of  a  commodity  materially  increases  through  curtailed 
production,  so  it  decreases  in  the  same  ratio  through 
increased  production.  A  basic  six-hour  labor  day  can- 
not, however,  prove  an  economic  advantage  unless  an 
ample  supply  of  labor  permits  the  employment  of  two 
shifts  and  production  is  thereby  increased  fifty  per 
cent.  It  may  benefit  an  individual  concern  even  where 
labor  is  scarce,  by  attracting  it  from  industries  in 
which  a  longer  workday  is  operative.  This  advan- 
tage, however,  ceases  if  a  six-hour  day  is  adopted  by 
other  industries  in  the  same  locality. 

The  present  contraction  in  the  world's  production 
is  due  not  only  to  relaxed  human  exertion  but  also  to 


CURTAILED  LABOR  63 

relaxed  mechanical  power,  which  remains  inactive  and 
unproductive  whenever  and  wherever  human  labor 
relaxes.  Unlike  human  labor,  mechanical  power  can- 
not attain  higher  efficiency  as  a  result  of  curtailed  op- 
erating time.  On  the  contrary,  mechanical  power 
demonstrates  its  highest  economic  efficiency  and  value 
under  maximum  operation. 


CAN  REDUCED  HOURS  ADVANCE  THE  WEL- 
FARE OF  LABOR  AND  OF  SOCIETY? 

The  advocates  of  the  short  workday  do  not  confine 
themselves  to  economic  reasons  for  the  support  of  this 
movement,  but  they  also  base  it  upon  moral  standards, 
or,  to  be  more  specific,  they  urge  it  in  the  interest  of 
the  moral  and  physical  betterment  of  the  laborer  as 
well  as  to  promote  his  contentment.  Under  this  doc- 
trine of  a  new  sociology,  which  entirely  reverses  the 
fundamental  principles  of  society,  a  shorter  day's  work, 
and  not  the  maximum  individual  effort  and  service 
conducive  to  life  and  health,  is  demanded,  not  only  in 
the  interest  of  labor  but  also  in  the  interest  of  society. 
Eight  hours  of  daily  work  have  been  arbitrarily  fixed 
as  the  limit  beyond  which  it  is  contended  the  moral 
and  physical  betterment  of  the  individual  laborer  is 
retarded,  his  efficiency  impaired,  and  his  contentment 
lessened.  Contentment  is,  however,  a  matter  of  in- 
dividual temperament,  and  a  shorter  labor  day  will  not 
create  nor  develop  this  characteristic.  Some  are  con- 
tented and  happy  under  a  ten-hour  workday,  provided 
their  wage  permits  them  to  lead  a  decent  existence, 
whereas  others  are  discontented  and  rebellious,  no  mat- 
ter how  short  the  day's  la]K)r  or  how  large  the  wage. 

64 


REDUCED  HOURS  65 

Evidently  the  promised  contentment  of  labor  as  a 
result  of  the  eight-hour  day  proved  of  very  short  dura- 
tion, for  a  further  reduction  of  working  time  to  a 
forty-four-hour  week  basis  is  being  pressed  with  all 
the  powers  which  organized  labor  can  command,  and 
in  some  industries  demands  are  being  made  for  a 
thirty-hour  week.  It  is  needless  to  point  out  that  the 
time  difference  will  cause  an  additional  tax  upon  so- 
ciety in  the  form  of  increased  cost  of  living  as  a  re- 
sult of  the  reduced  quantity  and  the  higher  cost  of 
production. 

Reduced  hours  of  labor  not  only  deplete  the  sup- 
ply of  labor  but  the  supply  of  every  commodity,  with 
the  result  that  the  public,  including  the  laborer  him- 
self, is  burdened  with  an  inflated  cost  of  living.  Cur- 
tailed production  more  than  a  higher  wage  is  re- 
sponsible for  the  high  cost  of  commodities,  for  a  plant 
which  reduces  its  output  below  its  normal  equipment 
and  capital  facilities,  either  has  to  operate  at  a  loss 
or  to  increase  largely  the  rate  of  profit,  the  latter  be- 
ing further  encouraged  by  the  lessened  competition. 
When  the  selling  price  of  a  product  is  based  upon  a 
low  production,  and  in  addition  upon  a  higher  wage, 
a  higher  cost  of  operation  and  maintenance,  and  a 
higher  rate  of  profit,  an  inflated  cost  to  the  consumer 
becomes  inevitable,  and  the  public  begins  to  feel  the 
pinch  of  the  high  cost  of  living. 

A  most  critical  state  of  inflation  is  created  when  the 


66  LABOR'S  CRISIS 

curtailed  production  is  inadequate  to  meet  the  normal 
requirements  of  the  people  and  when  competitive  buy- 
ing operates  in  place  of  competitive  selling,  for  then 
the  inflated  cost  of  living  goes  on  unchecked  and  be- 
comes a  most  serious  economic  and  social  problem, 
which  becomes  burdensome  even  to  those  who  are  in- 
strumental in  creating  it. 

Much  stress  is  placed  by  the  advocates  of  a  short 
workday  upon  intensive  labor,  which  it  is  claimed  re- 
sults from  lessened  hours  and  increases  the  produc- 
tivity of  labor.  The  power  of  intensive  work  is, 
however,  an  individual  and  temperamental  character- 
istic, although  under  a  strong  stimulus  or  incentive  the 
average  human  being  is  capable  of  intensifying  his 
efforts,  but  with  frequent  relapses,  which  as  a  rule  off- 
set the  gain  and  produce  an  average  nonnal  expenditure 
of  energies  for  a  given  period.  Steady  work  main- 
tained at  normal  energy  is  more  valuable,  so  far  as 
service  and  productivity  are  concerned,  then  intensive 
work  spasmodically  performed  under  high  pressure. 
Intensive  work  is  neither  an  economic  nor  a  social 
benefit,  and  if  maintained  for  a  long  period  may  im- 
pair the  health  and  shorten  the  life  of  the  worker. 
As  in  the  power  engine,  the  economic  value  of  labor 
is  measured  by  the  total  efficient  and  sustained  service 
in  a  term  of  years  and  not  by  the  amount  of  energy 
temporarily  aj)plied  under  certain  conditions. 

Tlic  laborer  is  also  supposed  to  require  more  leisure 


REDUCED  HOURS  dy 

to  improve  his  home  hfe  and  afford  himself  more  op- 
portunity for  intellectual  improvement.  But  the  op- 
posite could  be  maintained  with  equal  force,  for  not 
increased  leisure  but  steady  occupation  is  a  safe  moral 
guardian.  The  average  laborer  does  not  differ  in 
character  and  disposition  from  other  human  beings, 
and  the  increased  leisure  is  as  likely  to  tempt  him  to 
idleness  or  to  frivolous  and  undesirable  diversion  as 
to  be  applied  to  self -improvement.  Those  who  desire 
to  elevate  their  family  life  and  themselves  will  do  so 
whether  their  day's  work  consists  of  eight,  nine,  or 
ten  hours.  Concrete  evidence  has  never  been  pre- 
sented to  prove  that  the  eight-hour  laborer  is  morally, 
mentally,  or  physically  of  a  higher  type,  nor  that  his 
family  is  on  a  higher  level  than  that  of  the  nine-hour 
laborer,  provided  the  wage  is  the  same.  The  store- 
keeper and  the  clerk,  as  well  as  many  of  those  engaged 
in  business  and  in  the  professions,  work  more  than 
eight  hours  a  day,  but  it  cannot  be  said  that  they  are 
on  a  lower  plane  morally,  mentally,  or  physically,  than 
those  performing  a  shorter  day's  work. 

The  industrial  development  of  the  last  century  was 
responsible  for  many  social  evils,  not  the  least  of  which 
was  the  twelve-  to  fourteen-hour  workday,  but  it  does 
not  follow  that  the  other  extreme  of  reducing  the 
hours  of  labor  to  a  forty-four-hour  week,  or  even  to 
an  eight-hour  day,  regardless  of  the  exertion  which  the 
labor  involves,  will  prove  a  blessing  to  society  or  a 


68  LABOR'S  CRISIS 

permanent  benefit  to  labor.  When  curtailed  working 
time  ceases  to  be  a  factor  of  increased  efficiency,  it  is 
no  longer  a  benefit  but  an  injury  to  society. 

Stripped  of  abstract  theories  and  reduced  to  a  prac- 
tical problem,  the  following  concrete  results  of  cur- 
tailment of  labor  seem  to  be  clearly  established : 

1.  Increased  scarcity  of  labor, 

2.  Decreased  production, 

3.  Increased  cost  of  labor  and  of  production, 

4.  Higher  cost  of  living. 

Existing  economic  and  labor  conditions  show  that 
the  greatly  reduced  working  time  has  not  developed 
higher  labor  efficiency  nor  produced  greater  labor  con- 
tentment nor  reduced  labor  unrest,  but  has  produced 
the  opposite  effect.  Decreased  production  must  also 
lead  to  decreased  consumption,  for  a  wide  gap  cannot 
exist  between  them,  and  a  decided  contraction  in  the 
one  will  force  the  same  upon  the  other.  The  factor 
which  strongly  influences  both  production  and  con- 
sumption, or  what  is  temied  supply  and  demand,  is 
the  cost  of  the  product,  and,  barring  temporary  ab- 
normal conditions,  consumption  and  demand  are  stimu- 
lated by  a  low  cost  and  are  retarded  by  a  high  cost  of 
the  product. 

The  curtailment  of  the  time  of  labor  presents  a 
logical    and   com[)rchensive   policy   in   the   interest   of 


REDUCED  HOURS  69 

labor  and  of  far-reaching  economic  and  social  conse- 
quence to  the  general  public.  By  reducing  the  day's 
work  the  supply  and  the  wage  of  labor  are  more  ef- 
fectively controlled  and  the  demand  for  labor  is  greatly 
stimulated.  Labor  congestion  is  lessened  in  times  of 
depression  and  labor  scarcity  increased  in  times  of 
recovery.  It  enhances  the  power  and  the  influence  of 
labor,  for  the  greater  the  scarcity  of  labor  the  more 
effectively  can  labor  command  recognition  and  the 
more  arbitrary  and  the  more  numerous  becomes  its 
demands. 

Power  exercised  by  those  who  formerly  had  to  bow 
to  it  and  were  oppressed  by  it,  is  rarely  distinguished 
by  moderation  or  consideration.  It  usually  degener- 
ates into  a  rule  of  despotism,  serving  only  the  interest 
of  a  particular  class,  regardless  of  its  evil  conse- 
quences upon  others.  It  is  not  necessary  to  refer  to 
the  French  Revolution  for  an  example,  for  the  present- 
day  condition  in  most  of  the  European  countries  offer 
a  vivid  illustration  of  the  state  of  society  controlled 
politically  and  economically  by  the  working  class. 

While  the  curtailment  of  w^orking  time  increases  the 
demand  for  labor  and  also  increases  the  wage,  the 
advantages,  so  far  as  the  individual  laborer  is  con- 
cerned, are  nevertheless  in  many  respects  delusive,  for 
the  high  cost  of  living  weighs  heavily  on  him  also,  not- 
withstanding his  higher  wage.  Whatever  the  wage 
and  the  standard  working  time,  the  cost  of  living  will 


70  LABOR'S  CRISIS 

adjust  itself  to  the  same  basis,  for  in  the  race  between 
the  wage  and  the  cost  of  Hving  neither  can  gain  a 
permanent  lead.  It  is  only  by  performing  additional 
work  beyond  the  standard  workday,  or  in  other  words 
by  increased  efforts,  that  the  laborer  can  gain  an  eco- 
nomic advantage  over  the  higher  cost  of  living.  Com- 
mon welfare  is  not  promoted  nor  can  the  economic  con- 
dition of  the  individual  laborer  be  permanently  im- 
proved by  reduced  effort  or  by  requiring  two  to  ac- 
complish the  work  of  one.  An  artificially  created  eco- 
nomic condition  w^hich  stimulates  the  demand  for  la- 
bor by  curtailing  and  restricting  individual  effort  vio- 
lates the  most  vital  social  and  economic  principles,  for 
the  human  family  can  progress  to  a  higher  level  only 
by  maximum  and  not  by  minimum  exertion. 


COST    OF    LIVING    SUBJECT    TO    PSYCHO- 
LOGICAL INFLUENCES 

Psychological  influences  play  a  very  important 
part  in  determining  not  only  supply  and  demand  and 
the  cost  of  living  but  also  the  action  and  policy  of 
producer  and  consumer.  Fear  of  competitionj  and 
eagerness  to  expand  and  to  establish  new  business  are 
powerful  factors  in  restraining  excessive  profits  and 
violent  price  fluctuations.  The  average  retail  price 
of  food,  as  shown  in  table  i,  page  29,  does  not  in- 
dicate an  advance  of  over  seven  per  cent,  in  any  one 
of  the  eight  years,  and  the  total  advance  for  the  entire 
period  was  twenty-five  per  cent.,  or  an  average  of  a 
little  over  three  per  cent.  Price  fluctuations  in  manu- 
factured products  move  within  an  even  narrower 
range,  and,  according  to  "  Dun's  Index  Number," 
published  by  Dun's  Mercantile  Agency,  the  total  in- 
crease from  1905  to  1914  amounted  to  eleven  per 
cent,  in  the  price  of  clothing  and  only  to  a  fraction 
of  one  per  cent,  in  the  price  of  metals.  Price  stability 
is  under  normal  circumstances  characteristic  of  most 
of  the  finished  staple  products,  and,  while  the  profit 
may  vary,  the  price  remains  fixed.     For  instance,  the 

71 


72  LABOR'S  CRISIS 

retail  price  of  shoes,  hats,  collars,  and  shirts,  is  rarely 
disturbed,  except  under  abnormal  economic  conditions. 
A  complete  economic  revolution,  however,  takes  place 
when  demand  exceeds  supply  and  consumer  and  mer- 
chant become  alarmed  at  the  difficulty  and  uncertainty 
of  securing  the  needed  supplies.  Whereas  fear  and 
uncertainty  of  finding  a  market  for  his  product  im- 
pose discretion  and  moderation  upon  the  producer,  the 
opposite  effect  is  produced  when  the  consumer,  alarmed 
by  the  existing  scarcity  of  goods,  attempts  to  cover 
his  wants  and  thereby  still  further  aggravates  the  evil 
of  a  deranged  economic  condition.  The  more  pressing 
his  needs,  the  higher  mount  prices  and  profits  and  the 
greater  also  the  temptation  of  hoarding  and  of  an- 
ticipating future  wants. 

It  should  be  borne  in  mind  that  the  economic  balance 
necessary  to  regulate  supply  and  demand  and  to  main- 
tain economic  normality,  is  not  at  the  point  where  the 
two  are  equal  but  where  the  supply  is  adequate  to 
meet  the  normal  demands  without  friction  and  dis- 
turbance. In  other  words  production  must  exceed 
and  anticipate  consumption  and  take  into  account  the 
time  required  for  the  transportation  and  distribution 
of  tlic  product  and  the  maintenance  of  the  reserve  sup- 
ply, which  must  always  be  available  to  satisfy  imme- 
diate needs.  The  supply  of  daily  bread  cannot  wait 
for  the  milling  and  transporting  of  flour,  nor  can  the 


COST  OF  LIVING  jt, 

individual  shivering  from  cold  wait  for  the  manufac- 
ture of  winter  clothes.  The  margin  of  safety  lies  in 
the  reserve  supply  available  for  immediate  consump- 
tion, and  the  closer  consumption  comes  to  production 
the  more  serious  the  consequence  if  a  depleted  supply 
of  goods  becomes  manifest.  The  reserve  supply  acts 
as  the  balance  wheel  in  the  operation  of  supply  and 
demand,  and,  when  that  becomes  affected  by  inade- 
quate production,  the  entire  economic  machinery  is 
thrown  out  of  gear. 

The  whole  world,  including  countries  not  directly 
affected  by  the  war,  is  suffering  from  a  depleted  re- 
serve of  the  necessary  commodities  and  from  a  high 
cost  of  living,  solely  as  the  result  of  a  universally  im- 
paired and  weakened  productive  power.  The  reserve 
supplies  have  been  completely  drained  by  the  vast  de- 
mands made  upon  them  during  the  period  of  the 
war  and  by  the  diversion  of  the  man  power  from 
productive  to  destructive  occupation.  They  cannot  be 
replenished  nor  can  production  be  speeded  up  by  the 
persistent  policy  of  labor  of  enjoying  more  and  more 
leisure  and  of  resorting  to  widespread  strikes  to  en- 
force this  policy.  Political  and  legislative  action  can- 
not remedy  the  evil  which  threatens  to  reduce  society 
to  a  primitive  state,  nor  can  it  create  abundance  where 
want  exists  owing  to  the  impaired  functions  of  labor. 

Economic  balance  and  normality  will   be   restored 


74  LABOR'S  CRISIS 

when  labor  awakens  from  its  dream  of  a  new  Utopia 
and  realizes  that  its  own  welfare  is  closely  linked  with 
the  welfare  of  society  and  that  it  cannot  escape  the 
consequence  of  an  economic  policy  based  upon  the 
principle  of  maximum  return  and  minimum  exertion. 


INFLATED  COST  OF  LIVING  DUE  TO 
CONTRACTION  OF  LABOR 

Whereas  psychological  influences  act  as  a  stimulus 
to  the  inflation  of  prices,  the  rising  cost  of  living  is 
primarily  due  to  economic  pressure,  which  gains  in 
force  as  the  disparity  between  supply  and  demand  in- 
creases. Reduced  production  resulting  from  cur- 
tailed labor  sets  a  number  of  factors  in  action,  each 
of  which  adds  to  the  cost  of  production  and  has  a 
threefold  effect  on  the  cost  of  labor.  It  increases  the 
operating  cost  of  labor  in  proportion  to  the  decreased 
production ;  it  increases  the  cost  of  piece  and  hour 
work  to  equalize  the  reduced  working  opportunities ; 
and  it  raises  the  wage  standard  as  a  result  of  the 
higher  cost  of  living.  A  rising  cost  of  commodities 
also  compounds  profits  unless  the  rate  of  profit  is 
proportionately  reduced.  An  advance  of  one  hundred 
per  cent,  in  the  selling  price  of  an  article  requires  a 
reduction  of  fifty  per  cent,  in  the  rate  of  profit  if  the 
amount  of  the  latter  is  not  to  be  increased.  But  in 
the  face  of  an  inflated  business  expense  and  an  in- 
flated living  cost,  the  increased  earnings  may  be  per- 
fectly justified,  just  as  labor  is  justified  under  the 
same  conditions  in  demanding  and  receiving  a  largely 

75 


76  LABOR'S  CRISIS 

increased  wage.  Not  that  profiteering  is  not  also  one 
of  the  features  and  an  inevitable  factor  of  price  infla- 
tion. The  race  for  material  gain  is  inherent  in  the 
human  being,  and  greed  and  reckless  speculation  be- 
come particularly  manifest  under  unbalanced  social 
and  economic  conditions,  when  restraint  is  not  exer- 
cised and  the  sense  of  proportion  is  lost. 

A  simple  illustration  will  make  clear  the  effect  of 
curtailed  labor  upon  the  prices  of  commodities  and  the 
impulse  it  lends  to  the  inflation  of  the  cost  of  living. 
A  manufacturing  plant  equipped  and  capitalized  for 
a  normal  output  of  ioo,cx)0  yards,  selling  at  one  dol- 
lar a  yard,  and  yielding  a  profit  of  ten  thousand  dol- 
lars, or  ten  per  cent  on  the  total  sales  of  $100,000,  is 
by  reason  of  twenty-five  per  cent,  labor  curtailment 
reduced  to  an  output  of  75,000  yards.  If  the  same 
amount  of  profit  is  to  be  earned  on  the  reduced  output 
of  75,000  yards  as  on  the  normal  output  of  100,000 
yards,  namely  $10,000,  the  selling  price  of  the  fabric 
will  have  to  be  advanced  to  $i.33/<3  a  yard.  It  will 
be  observed  that  without  any  additional  profit  to  the 
producer  the  mere  curtailed  production  of  twenty-five 
per  cent,  compels  an  advance  of  thirty-three  and  one- 
third  j)er  cent,  in  the  selling  price  of  the  product.  But 
the  reduced  output  also  starts  a  number  of  other  fac- 
tors to  inflate  the  cost  and  largely  increase  the  selling 
price  of  the  fabric.  Overhead  charges,  materials,  and 
supplies,  which  are  likewise  affected  in  price  by  the 


INFLATED  COST  OF  LIVING  -jy 

shorter  standard  workday  and  above  all  by  the  largely 
increased  wage  which  is  the  natural  sequel  of  a  higher 
cost  of  living,  all  contribute  to  swell  the  productive 
cost  and  create  a  generally  inflated  economic  condition. 
The  greatly  increased  cost  also  demands  larger  work- 
ing capital  and  involves  greater  commercial  risk. 

The  facts  presented  here  show  that  the  process  of 
inflation  follows  a  natural  course  according  to  eco- 
nomic laws,  and  the  conclusion  may  be  safely  drawn 
that  the  curtailment  of  twenty-five  per  cent,  in  indus- 
trial labor  productivity  will  automatically  force  an 
average  advance  of  over  sixty  per  cent,  in  the  selling 
price  of  the  products  without  any  evidence  or  stigma 
of  profiteering.  An  average  advance  of  sixty  per  cent, 
in  the  cost  of  all  manufactured  products  is  equivalent 
to  an  annual  tax  on  their  consumption  of  $14,547,- 
860,834,  based  on  the  value  of  the  industrial  products 
of  $24,246,434,724  for  the  year  19 14,  as  given  in 
table  2,  page  30.  Measured  by  wage  value,  an  ad- 
vance of  three  hundred  fifty-seven  per  cent,  in  the 
total  wage  of  $4,078,332,433  as  shown  in  table  2  would 
have  the  same  effect  on  the  cost  of  the  product  as  a 
reduced  production  of  only  twenty-five  per  cent.  These 
figures  convey  in  visible  form  the  effect  and  the  cost 
of  an  economic  policy  of  which  curtailed  labor  is  the 
outstanding  principle. 


LABOR  WELFARE  AS  RELATED  TO  MA- 
TERIAL AND  SOCIAL  WELFARE 

Both  material  welfare  and  labor  welfare  are  ele- 
ments of  social  welfare,  although  under  certain  condi- 
tions they  may  affect  the  latter  unfavorably.  Ma- 
terial welfare,  often  associated  with  a  higher  civiliza- 
tion and  a  higher  standard  of  living,  has  purely  an 
economic  and  material  basis  and  enters  into  social 
welfare  only  when  it  is  instrumental  in  providing  op- 
portunities and  facilities  for  a  decent  and  healthy  ex- 
istence. Merely  serving  as  a  means  for  increasing 
comforts  and  conveniences  beyond  essential  require- 
ments and  for  spreading  material  indulgence  and  pleas- 
ures, material  welfare  forms  the  antithesis  of  social 
welfare,  if  not  a  germ  of  individual  and  national  de- 
cline and  decay. 

Social  welfare  may  reach  a  high  level  even  though 
evidence  of  material  welfare  does  not  exist  and  life 
is  maintained  on  a  more  primitive  basis  than  is  popu- 
larly associated  with  modern  civilization.  Accumu- 
lation of  wealth  may  be  difficult  and  rare,  industrial, 
technical,  and  scientific  (le\c]()i)nK'nt  may  be  slow,  mod- 
ern comforts  and  conveniences  may  be  absent,  and  yet 
a  people  may  be  far  in  advance  in  social  welfare  and 

78 


LABOR  WELFARE  79 

in  social  justice  of  those  showing  evidence  of  material 
progress  and  of  modern  civilization.  Social  welfare  is 
determined  and  is  actuated  by  moral  forces  and  it 
cannot  thrive  where  extreme  poverty  and  great  wealth 
are  the  contrasting  features  of  a  social  order. 

Labor  welfare,  although  it  enters  as  an  important 
element  into  social  welfare,  may,  like  material  welfare, 
affect  it  unfavorably.  The  protection  of  life  and 
health  and  the  promotion  of  the  moral  and  intellectual 
qualities  of  the  people,  whether  relating  to  labor  or 
to  any  other  unit  of  society,  is  the  aim  of  the  state,  as 
it  is  also  the  fundamental  principles  of  social  welfare. 
Beyond  that,  labor  welfare  and  social  welfare  may 
reach  a  point  of  decided  divergence,  and  the  interest 
of  the  former  may  be  diametrically  opposed  and  be 
detrimental  to  the  principles  of  the  latter.  For  in- 
stance, reduced  hours  of  labor,  in  lessening  exertion, 
and  in  increasing  the  opportunities  for  employment 
and  for  a  higher  wage,  promote  labor  welfare.  But 
in  lessening  the  supplies  and  greatly  enhancing  the 
cost  of  the  necessaries  of  life  they  may  become  a  dis- 
tinct menace  to  the  state  as  well  as  to  social  welfare. 
To  show  how  delicately  the  scale  of  labor  welfare  and 
social  welfare  balance,  we  will  take  the  case  of  an 
increased  wage  to  transportation  workers  as  a  result 
of  which  the  public  has  to  submit  either  to  an  increased 
fare  or  to  curtailed  transportation  facilities,  or  the 
road  would  be  operated  at  a  loss,     The  greater  nun]- 


8o  LABOR'S  CRISIS 

ber  may  in  this  instance  have  to  suffer  for  the  benefit 
of  a  few,  and  the  greater  number  may  represent  those 
to  whom  the  increased  fare  or  the  decreased  railroad 
facilities  is  of  greater  consequence  than  the  increased 
wage  is  to  labor. 

Evidently  the  promotion  of  labor  welfare  has 
strongly  marked  limitations,  so  far  as  social  welfare 
is  concerned.  The  impression  should  not  be  gained, 
however,  that  in  the  struggle  with  capital  for  a  just 
and  equitable  compensation  social  welfare  is  not  being 
promoted.  On  the  contrary  social  welfare  demands 
that  the  opportunities  for  a  decent  existence  shall  be 
offered  to  all  alike ;  that  the  weak  shall  be  protected 
against  the  strong;  that  no  class  shall  enjoy  special 
privileges  and  promote  its  own  w'elfare  to  the  detri- 
ment of  the  common  welfare. 

Some  of  the  principal  labor  reforms,  as  the  child 
labor  laws  and  female  labor  laws,  were  enacted  mainly 
in  the  interest  of  society,  incidentally  also  benefiting 
labor.  The  child  labor  laws  were  not  originally  fa- 
vored l)y  the  individual  laborer,  who  considered  the 
cliild  an  economic  asset  and  a  necessary  contributor 
to  the  support  of  the  family. 

In  the  broad  sense,  organized  labor  cannot  be  said 
t(j  be  interested  in  the  welfare  of  the  individual  la- 
borer, except  as  he  may  be  affected  by  the  wage  or  by 
Injurs  of  ]a1)<)r.      Its  inlercsl  in  ihc  laborer  is  confined 


LABOR  WELFARE  8i 

to  the  shop  and  to  the  factory  and  does  not  extend  to 
the  home  and  to  the  family.  Organized  labor  is  in- 
different regarding  many  of  the  labor  questions  which 
enter  into  social  and  labor  welfare,  as,  for  instance, 
housing  of  the  laborer  or  the  moral  and  intellectual 
improvement  of  the  laborer.  This  is  explained  by 
the  contention  of  organized  labor  that  an  adequate 
wage  is  the  solution  of  those  problems  and  the  cure 
for  most  of  the  social  ills.  To  a  large  extent  this 
contention  is  justified,  but  the  fact  must  also  be  taken 
into  consideration  that  dollars  and  cents  alone  do  not 
determine  the  adequacy  of  the  wage,  and  that  it  must 
be  supported  by  thrift,  foresight,  and  frugality,  which 
as  a  rule  are  not  characteristics  of  the  laborer.  The 
prevailing  inflated  wage  has  not  materially  improved 
the  economic  condition  of  the  average  laborer,  and 
this  is  not  due  so  much  to  the  high  cost  of  living,  as 
is  being  claimed,  but  to  improvident  and  shiftless 
habits.  He  is  less  exposed  to  involuntary  idleness, 
but  he  indulges  more  in  frequent  spells  of  voluntary 
idleness,  which  the  high  wage  encourages.  In  many 
instances  the  wage  is  being  dissipated  on  trifles  and 
useless  things,  whereas  in  the  more  essential  factors 
of  a  higher  standard  of  living,  as  for  instance  decent 
and  sanitary  housing,  the  conditions  are  unchanged 
and  remain  on  a  low  level.  The  thrifty  laborer  is,  of 
course,  decidedly  benefited  by  the  high  wage,  but  he 


82  LABOR'S  CRISIS 

is  the  one  who  is  least  affected  under  adverse  economic 
conditions,  and  he  never  enters  into  the  poverty 
problem. 

Labor  forms  only  one  of  the  units  of  society,  not 
distinct  from  the  others  either  in  privileges  and  rights 
or  in  duties  and  obligations.  When  it  attempts  to  set 
its  own  welfare  above  the  welfare  of  the  state  it  cre- 
ates a  condition  which  violates  the  principles  of  democ- 
racy and  brings  it  into  decided  conflict  with  law  and 
order. 


CAUSES  OF  THE  PRESENT  LABOR  FERMENT 

The  world-wide  labor  unrest  which  is  agitating  and 
convulsing  society  springs  from  different  causes  and 
is  moved  by  a  different  spirit  from  industrial  labor 
unrest.  It  cannot  be  arrested  nor  modified  by  a  high 
wage,  nor  by  a  short  working-day,  nor  by  any  of  the 
ordinary  methods  and  measures  which  under  normal 
conditions  regulate  the  relationship  of  labor  and  cap- 
ital. It  is  moved  by  higher  aspirations,  demanding 
not  merely  a  full  share  in  the  production  of  wealth 
but  aiming  in  many  lands  at  the  complete  reformation 
of  existing  political,  social,  and  economic  institutions. 
This  widespread  spirit  of  unrest,  which  has  a  dis- 
tinctly psychological  aspect,  is  not  confined  to  the 
proletariat  nor  to  any  special  type  of  labor  nor  to  any 
particular  industry.  The  skilled  and  the  unskilled, 
the  industrious  and  the  lazy,  the  wellpaid  and  the 
underpaid,  the  protected  and  the  abused,  come  under 
its  magic  sway,  agitating  and  fermenting  the  forces 
of  production  wherever  labor  is  a  factor  of  society. 
With  irresistible  power  it  is  removing  political  and 
social  barriers  which  have  endured  for  ages;  it  is  dis- 
integrating and  destroying  in  many  lands  the  founda- 
tions on  which  the  state  and  society  have  been  reared; 

83 


84  LABOR'S  CRISIS 

it  is  setting  up  its  own  laws  and  its  own  economic  or- 
ganizations. Like  a  torrential  stream  the  momentum 
of  the  movement  suffers  no  impediments  and  is  creat- 
ing its  own  channels  and  outlets. 

The  employment  and  treatment  of  labor  were  re- 
duced to  ethical  principles  and  to  concrete  laws  in 
Biblical  times,  but  the  labor  problem  still  survives  and 
is  likely  to  endure  for  all  time  unless  a  new  social 
structure  can  be  reared  in  which  the  wage  will  no 
longer  operate  as  a  factor  in  the  performance  of  labor. 
Whereas  the  labor  problem  may  be  considered  im- 
mutable, the  factors  and  elements  w'hich  enter  into  it 
are  constantly  displaced  by  new  ones,  which  are  cre- 
ated by  the  social  conditions  of  the  period.  Slavery, 
immigration,  child  labor,  the  inadequate  wage,  and  the 
long  working-day  have  all  in  turn  given  life  to  the 
labor  problem  in  recent  times. 

Probably  at  no  time,  however,  has  the  employment 
of  labor  presented  a  problem  so  complex  and  so  dif- 
ficult of  solution  as  the  present  labor  unrest.  It  is  not 
based  upon  nor  impelled  by  any  specific  evil  from 
which  labor  is  specially  suffering  at  the  present  time, 
although  it  is  marked  by  insatiable  demands  for  higher 
wages  and  reduced  working  time.  Its  outstanding 
symptom  is  \i(»lcnl  discontent  with  existing  social 
coiiditiniis,  j)artic-ularl\-  in  relation  to  caj)ital  and  to 
tlie  i;nf(|ual  division  of  wealth. 

'Ilu-  aim  of  the  labor  revolt,  as  it  may  be  correctly 


THE  PRESENT  LABOR  FERMENT       85 

termed,  varies  in  different  countries  according  to  the 
political,  social,  and  economic  condition  of  labor.  In 
countries  in  which  the  political  rights  of  the  laborer 
have  been  curtailed,  as  in  Russia  and  to  a  less  extent 
in  Germany,  the  economic  aims  are  blurred  in  the 
multitude  of  political  and  social  reforms.  In  demo- 
cratic countries  like  the  United  States  and  England, 
labor  unrest  is  based  upon  economic  conditions  and 
does  not  concern  itself  with  the  existing  political  and 
social  institutions.  One  economic  principle  gives  pow- 
erful impulse  to  the  labor  movement  wherever  it  is 
taking  root  —  a  high  wage,  with  greatly  lessened  if 
not  minimum  exertion. 

Much  as  the  aims  and  manifestations  of  labor  unrest 
may  differ  in  various  countries,  they  spring  from  a 
common  cause  and  a  common  grievance  and  represent 
the  cumulative  result  of  an  unbalanced  and  unjust  so- 
cial and  economic  condition  dating  back  several  gen- 
erations. The  transition  from  home  industry  to  fac- 
tory labor  and  the  rapid  development  of  the  latter  in 
the  nineteenth  century  caused  a  radical  change  in  the 
life  of  the  wage  earner,  affecting  not  only  his  family 
life  and  his  working  conditions  but  also  imposing  upon 
him  new  trials  and  hardships.  From  the  rural  dis- 
tricts and  small  towns  —  with  the  greater  ease  and 
comfort  they  offer  and  the  attachment  for  home  they 
develop  —  he  was  transplanted  into  congested  indus- 
trial centers,  where  ideals  do  not  thrive,  individuality 


86  LABOR'S  CRISIS 

and  ambition  are  weakened,  and  the  worker  is  reduced 
to  an  integral  part  of  the  mechanism  which  he  is 
operating.  The  wage  for  twelve  to  fourteen  hours  of 
daily  labor  provided  the  worker  with  only  the  absolute 
essentials  for  bare  physical  existence,  but  this  pre- 
carious condition  often  changed  into  a  spell  of  utter 
destitution  when  any  contingency  arose  affecting  his 
earnings  or  increasing  his  expenses.  Opportunities 
for  self-improvement  or  for  healthy  diversion  did  not 
exist,  the  squalid  home  offered  no  attraction,  and  the 
liquor  saloon  was  his  only  place  of  refuge,  where  he 
was  a  welcome  patron,  and  where  in  the  companion- 
ship of  his  fellow  sufferers  he  would  seek  to  obliterate 
his  cares  and  sorrows.  The  following  report  sub- 
mitted in  1885  is  in  no  wise  an  overdrawn  picture  of 
the  economic  and  social  status  of  the  average  laborer 
of  that  period,  and  in  many  respects  it  would  fit  the 
conditions  of  a  large  part  of  the  laboring  class  of  to- 
day: 

"  Ninety  per  cent,  of  the  actual  producers  of  wealth 
have  no  home  that  they  can  call  their  own  beyond  the 
end  of  the  week;  have  no  bit  of  soil,  or  so  much  as  a 
room,  that  belongs  to  them;  have  nothing  of  value  of 
any  kind,  except  as  much  old  furniture  as  will  go  in  a 
cart;  have  tlic  precarious  chance  of  weekly  wages, 
which  barely  suffice  to  keep  them  in  health ;  are  housed 
for  the  most  part  in  places  that  no  man  thinks  fit 
for  his  horse;  are  separated  by  so  narrow  a  margin 


THE  PRESENT  LABOR  FERMENT       87 

from  destitution,  that  a  month  of  bad  trade,  sickness, 
or  unexpected  loss,  brings  them  face  to  face  with 
hunger  and  pauperism.  .  .  .  This  is  the  normal  state 
of  the  average  workman  in  town  or  country."  ^ 

Pathetic  as  this  portrayal  is,  it  presents  a  decided 
improvement  upon  the  deep  misery  and  degradation  of 
the  working  class  in  the  early  part  of  the  nineteenth 
century,  described  by  President  Walker  as  follows : 
"  The  beginning  of  the  present  century  found  children 
under  five  and  even  three  years  of  age,  in  England, 
working  in  factories  and  brick-yards ;  women  working 
underground  in  mines,  harnessed  with  mules  to  carts, 
drawing  heavy  loads;  found  the  hours  of  labor  what- 
ever the  avarice  of  the  individual  mill-owners  might 
exact,  were  it  thirteen,  or  fourteen  or  fifteen.^  .  .  , 
Children  had  not  a  moment  free,  save  to  snatch  a  hasty 
meal  or  sleep  as  best  they  could.  From  earliest  youth 
they  worked  to  a  point  of  extreme  exhaustion,  with- 
out open  air  exercises,  or  any  enjoyment  whatever,  but 
grew  up,  if  they  survived  it  all,  weak,  bloodless,  miser- 
able and  in  many  cases  deformed  cripples,  and  vic- 
tims of  almost  every  disease."  ^ 

These  iniquities  were  common,  not  in  the  dark  ages 
and  not  in  a  barbarous  country  but  in  the  nineteenth 
century  and  in  civilized  England,  the  cradle  of  political 

1  Industrial    Remuneration    Committee,    Report,    1885,    p.    429, 
in  paper  on  Remedies  for  Social  Distress,  hy.  Frederic  Harrison. 
-  Francis  A.  Walker,  "  Political  Economy,"  1888,  pp.  380-81. 
3  "  Encyclopaedia  of  Social  Reform,"  1897,  p.  234. 


88  LABOR'S  CRISIS 

and  social  reform !  Even  the  early  labor  reform  meas- 
ures do  not  reveal  the  av^'akening  of  a  strong  moral 
conscience;  they  disclose,  so  far  as  the  treatment  of 
labor  is  concerned,  a  deep-rooted  moral  torpor,  which 
characterized  at  that  period  not  only  England  but  all 
ci\"ilized  countries  including  the  United  States.  In 
1 83 1  a  law  was  enacted  in  England  restricting  factory 
labor  of  children  between  nine  and  sixteen  years  of 
age  to  twelve  hours  a  day.  It  seems  almost  incon- 
ceivable in  this  more  enlightened  age  that  twelve  hours 
of  daily  factory  labor  by  children  only  nine  years  of 
age  should  have  been  considered  a  reform  and  was 
sanctioned  by  enactment  of  law,  not  to  say  approved 
by  human  conscience.  Nevertheless  this  slight  better- 
ment symptomatizes  an  awakening  of  public  conscious- 
ness to  the  sins  committed  against  labor  and  against 
humanity,  as  it  also  marks  the  dawn  of  a  new  era,  in 
which  the  spirit  of  labor  is  impressed  upon  every  act 
and  every  endeavor  of  modem  social  organization. 
Labor  has  shaken  off  the  yoke  which  it  has  carried 
from  the  times  of  the  Pharaohs  in  Egypt,  and  with  ir- 
resistible force  it  is  revolutionizing  the  fundamental 
principles  which  have  governed  and  sustained  the  hu- 
man family  from  time  immemorial. 

While  the  present  uplicaval  is  the  natural  result  of  an 
economic  maladjustment,  whicli  had  reduced  labor  to 
the  lowest  level  of  existence,  the  awakened  conscious- 
ness in  lalx)r  of  its  great  inherent  powers  for  a  dominat- 


THE  PRESENT  LABOR  FERMENT       89 

ing-  position  in  the  social  organization  is  primarily  due  to 
two  causes,  compulsory  education  and  trade  unionism. 
The  one  helped  to  spread  enlightenment  and  awaken 
the  dormant  reasoning  powers  of  the  ignorant;  the 
other  gave  power  to  collective  action  for  labor  better- 
ment, as  it  has  also  increased  the  power  of  labor  to 
secure  a  commanding  position  in  society.  In  countries 
not  touched  by  compulsory  education,  popular  agita- 
tion served  as  the  means  of  stirring  the  mind  of  the 
worker  and  caused  widespread  upheaval.  The  greasy 
and  decaying  rag  is  harmless  in  the  closed  closet,  but 
spontaneous  combustion  will  result  when  the  door  is 
opened  and  the  rag  is  exposed  to  air.  Labor  as  long  as 
it  was  kept  in  darkness  and  in  ignorance  remained  stag- 
nant and  impotent,  but  in  touch  with  enlightenment 
it  becomes  a  combustible  and  dynamic  force,  threaten- 
mg  to  convulse  society  to  its  very  foundations.  Just 
as  steam  and  electricity,  without  the  application  of  sci- 
entific principles  for  their  proper  control,  are  forces  of 
destruction,  so  does  the  awakened  spirit  of  labor  de- 
mand guiding  principles  based  upon  right  and  justice  if 
it  is  to  prove  a  power  not  for  evil  but  for  good. 

Capital,  sensitive  as  it  is  to  every  change,  whether 
political,  social,  or  economic,  is  quick  to  recognize  the 
menace  to  itself  and  to  society  from  this  newly  awak- 
ened spirit  of  labor.  That  capital  is  stirred  into  ac- 
tion is  indicated  by  the  many  devices  it  is  evolving  to 
bring  about  closer  contact  and  more  intimate  relation- 


90  LABOR'S  CRISIS 

ship  with  labor.  By  means  of  limited  profit  sharing, 
rewards  and  bonuses,  labor  welfare  work,  by  giving 
labor  a  voice  in  labor  matters  through  "  industrial  de- 
mocracy," and  by  numberless  individual  schemes,  it  is 
proposed  to  conciliate  labor  and  remove  or  at  least  les- 
sen labor  unrest. 

All  these  measures  have,  however,  only  a  local  or 
temporary  effect,  depending  upon  the  type  and  the 
treatment  of  the  laborer,  and  they  do  not  help  to  sat- 
isfy the  large  majority  of  workers,  who  aspire  to  more 
substantial  recognition  than  a  benevolent  protectorate. 
The  conviction  that  the  wage  is  an  inadequate  and  in- 
equitable return  for  his  service  is  ever  present  in  the 
mind  of  the  laborer  and  perpetuates  his  discontent  and 
his  class  prejudice.  The  stipulated  wage  offers  him 
little  opportunity  for  improving  his  economic  condi- 
tion, and  only  under  the  most  favorable  circumstances, 
or  only  by  special  mierit,  can  he  permanently  detach 
himself  from  a  standard  of  life  in  which  care,  hardship, 
and  discomfort  form  the  main  features.  In  advanc- 
ing years  his  service  depreciates  in  market  value  and  is 
in  less  demand  when  ripe  experience  forms  in  other 
walks  of  life  the  most  valuable  asset.  If  he  were  a 
machine,  this  loss  would  be  covered  by  a  depreciation 
reserve  fund  especially  created  for  this  purpose.  But 
in  a  human  machine  the  reduced  earning  capacity  can, 
in  tlic  absence  of  oilier  i)r()visi()ns,  be  met  only  by  the 
adjustment  of  the  worker  to  a  lower  standard  of  liv' 


THE  PRESENT  LABOR  FERMENT       91 

ing.  Even  in  the  prime  of  the  laborer's  life  his  tenure 
of  employment  is  never  secure,  and  owing  to  economic 
depressions,  trade  fluctuations,  and  seasonality  of  pro- 
ducts, he  is  exposed  to  frequent  spells  of  involuntary 
idleness,  which  seriously  affect  his  sparse  earnings,  if 
they  do  not  bring  him  into  poverty  or  to  the  verge  of 
poverty.  The  labor  problem  is  all  the  more  complex 
because  labor  and  capital  form  economically  as  well  as 
socially  two  opposite  elements  and  are  operated  under 
economic  principles  which  discourage  co-operative  ac- 
tion and  thereby  prevent  their  closer  union. 

The  fundamental  weakness  in  the  relationship  of 
capital  and  labor  is  due  to  the  fact  that  only  one  of  the 
parties  is  materially  interested  in  the  result  of  the  joint 
efforts,  and  solidarity  of  aim  and  action  cannot  be  de- 
veloped under  conditions  which  do  not  offer  a  mutual 
incentive  for  cooperation.  All  social  institutions  de- 
rive their  binding  and  cohesive  force  from  a  common 
purpose  and  interest,  and  the  more  equitably  the  bene- 
fits are  shared  the  stronger  and  the  more  enduring  the 
union.  Capital  and  labor  will  form  a  strong  fellow- 
ship when  they  are  united  by  a  mutual  interest  in  the 
achievement  and  in  the  result  of  their  joint  operations. 
Labor  cannot,  however,  be  instrumental  in  removing 
the  existing  inequality  and  cannot  create  an  economic 
equilibrium  in  its  relationship  with  capital.  It  exer- 
cises only  certain  restricted  functions  but  no  special 
privileges  or  advantages  which  it  could  relinquish  or 


92  LABOR'S  CRISIS 

share  with  capital.  It  possesses  no  other  resources 
than  the  capacity  for  labor,  and  its  only  interest  in  the 
employment  is  an  explicit  wage.  Capital  alone  has  the 
power  of  readjusting  the  economic  relationship  on  a 
basis  of  mutual  interest,  and  it  can  accomplish  this  in 
a  measure  by  relinquishing  some  of  the  advantages  it 
enjoys  and  by  instituting  a  system  of  labor  compensa- 
tion combining  a  reasonable  wage  with  some  other  sub- 
stantial benefits  of  vital  interest  to  the  laborer. 

The  more  the  benefits  are  shared  with  labor,  the 
stronger  the  union  of  the  two  forces  will  be,  and  the 
less  also  will  be  the  income  from  capital.  The  effect 
on  industrial  development  of  a  greatly  reduced  income 
from  capital  is  not  to  be  minimized,  for  gain  is  the 
stimulus  and  the  magnet  which  attracts  capital  to  every 
enterprise  and  to  all  parts  of  the  globe.  Capital  can 
only  operate  and  in  turn  produce  new  capital  through 
the  incentive  of  gain.  Without  this  vital  force  com- 
mercial and  industrial  enterprise  would  not  be  pos- 
sible, opportunities  for  the  employment  of  labor  would 
not  exist,  and  the  economic  organization  of  society 
would  cease  to  function  or  be  reduced  to  a  primitive 
state. 

Capital  is,  however,  also  characterized  by  discretion 
ruid  conservatism,  and  is  exceedingly  sensitive  to  politi- 
cal, social,  and  economic  distiu'bances.  It  is  more 
timid  in  its  operations  than  the  individual,  for  it  seeks 
safety  at  the  slightest  symptom  of  danger,  whereas  the 


THE  PRESENT  LABOR  FERMENT       93 

latter  will  risk  health  and  life  in  pursuit  of  gain  and 
even  in  the  performance  of  labor  for  a  meager  wage. 
It  is  attracted  more  by  permanent  security  and  stabil- 
ity than  by  prospective  large  gains  under  threatening 
conditions.  Taking  all  these  facts  into  consideration, 
the  conclusion  seems  justified  that,  though  a  closer  bond 
between  capital  and  labor  will  involve  a  shrinkage  in 
the  profit  from  capital,  and  as  a  consequence  may  also 
weaken  the  stimulus  for  industrial  enterprise,  this  will 
to  some  extent  be  offset  by  offering  capital  greater  sta- 
bility and  security,  not  to  mention  the  higher  operating 
and  labor  efficiency  that  must  result  from  a  harmonious 
relationship  with  labor. 

Assuming,  however,  that  capital  will  be  vitally  af- 
fected by  a  greatly  reduced  income,  it  will  nevertheless 
find  it  necessary  from  force  of  circumstances  and  for 
its  own  preservation  to  adjust  itself  to  the  spirit  of 
the  times  and  to  form  a  more  intimate  alliance  with 
labor.  No  other  agency  can  be  created  to  combat  suc- 
cessfully the  revolutionary  influences  and  force  to 
which  labor  is  exposed  and  to  which  it  is  peculiarly  sus- 
ceptible. Capital  would  not  be  far-sighted  if  it  failed 
to  recognize  that  it  is  deeply  involved  in  the  universal 
social  revolt,  that  in  fact  it  forms  the  storm  center  and 
the  issue  in  the  struggle  of  the  masses  to  free  them- 
selves from  its  power  and  its  control. 

Modern  democracy,  as  it  is  being  interpreted  by  the 
masses  and  their  leaders,  not  only  aims  at  political  and 


94  LABOR'S  CRISIS 

social  equality  but  aspires  to  economic  supremacy  and 
to  the  eventual  control  of  the  economic  if  not  the  po- 
litical machinery  of  the  world.  Visionary  as  the  un- 
derlying principles  of  the  present  social  ferment  may 
in  many  respects  appear  to  the  practical  mind,  the  irre- 
sistible force  of  this  movement  is  bound  to  create  far- 
reaching  social  and  economic  changes,  affecting  partic- 
ularly the  operation  of  capital  as  well  as  its  accumula- 
tion. Evidence  of  the  powerful  pressure  of  public 
sentiment  upon  capital  is  not  wanting  even  in  coun- 
tries most  favored  by  normal  conditions,  like  the 
United  States,  where  by  means  of  every  form  of  taxa- 
tion capital  is  being  forced  to  pay  heavy  tribute  for  its 
preservation,  and  the  greater  part  of  its  earnings  and 
its  income  is  being  deflected  to  the  state.  The  same 
spirit  which  is  reflected  in  the  tax  measures  is  also  man- 
ifest in  many  other  laws  and  the  tendency  is  to  curb 
and  restrict  capital  and  to  tap  its  resources  to  the  ut- 
most for  the  benefit  of  the  state.  Capital  may  manage 
to  thrive  even  under  adverse  conditions  and  under 
strained  relations  with  labor,  but  it  exists  on  the  brink 
of  an  active  volcano,  and  it  is  never  free  from  the 
danger  of  violent  disturbances.  Popular  prejudice 
against  capital  is  not  a  modern  manifestation;  it  is 
as  old  as  the  relationship  of  master  and  servant.  It 
has,  however,  become  greatly  intensified  in  modern 
times  by  the  rapid  industrial  development,  by  the  vast 
accumulation  of  wealth,  and  by  the  increasing  power 


THE  PRESENT  LABOR  FERMENT       95 

of  capital.  Under  an  autocratic  form  of  government 
this  prejudice  cannot  find  outward  expression,  but  with 
the  spread  of  democracy,  or  rather  of  socialism,  the 
manifestations  against  capital  are  given  free  rein  and 
may  assume  dangerous  proportions,  as  is  witnessed  in 
many  European  countries  at  the  present  time. 

The  relationship  of  capital  and  labor,  wdiile  it  con- 
cerns more  directly  the  two  parties,  involves  neverthe- 
less a  tripartite  interest,  the  third  party  being  the  state, 
or  in  other  words  the  public,  which  is  distinctly  and 
vitally  interested.  This  relationship  is  subject  to  the 
regulations  and  in  a  measure  also  to  the  control  of  the 
state,  which  is  invested  with  the  power  of  imposing 
upon  it  restrictive  and  corrective  laws  in  the  interest  of 
the  commonwealth.  The  state  is  concerned  in  the  wel- 
fare of  labor  only  in  so  far  as  it  rests  upon  the  interest 
and  the  welfare  of  the  public,  as  for  instance  when  the 
low  living  and  W'Orking  standard  of  the  laborer  be- 
comes an  injury  or  a  menace  to  society  or  when  com- 
mon welfare  demands  the  prohibition  of  child  labor 
or  the  restriction  of  woman  labor. 

On  the  same  ground  the  state  is  concerned  not  only 
in  the  conflicts  of  capital  and  labor  but  also  in  their  co- 
operation if  the  latter  is  promoted  and  maintained  at 
the  expense  and  to  the  detriment  of  the  people.  For 
instance,  the  coal  operators,  who  under  ordinary  cir- 
cumstances would  contest  an  unreasonable  advance  in 
the  wage,  may  grant  the  increase  because  the  burden 


96  LABOR'S  CRISIS 

can  be  shifted  to  the  public  by  a  corresponding  ad- 
vance in  the  selling  price  of  coal.  The  mutual  interest 
of  capital  and  labor  is  promoted  in  this  instance,  but 
it  nevertheless  violates  public  policy  and  public  interest. 
As  the  guardian  of  public  welfare  the  state  can  exercise 
wide  latitude  in  so  regulating  the  relation  of  capital 
and  labor  that  the  acts  of  either,  or  their  joint  acts,  may 
not  become  a  source  of  danger  to  the  commonwealth. 
In  a  well-balanced  social  order  common  welfare  is  the 
paramount  aim  of  the  state,  and  the  interest  of  capital 
and  labor  is  subordinated  to  it.  Unrest  is  then  merely 
a  temperamental  manifestation,  or  the  expression  of 
individual  discontent,  and  not  an  evidence  of  social 
maladjustment. 

Employment  of  labor,  whatever  its  character,  de- 
mands the  functions  of  some  agency  for  the  exercise 
of  supervision,  control,  and  authority.  Whether  these 
functions  are  exercised  by  capital,  or  by  the  state 
according  to  socialistic  theories,  the  management  of 
labor  will  always  demand  the  enforcement  of  order 
and  discipline.  Factory  labor  cannot  be  operated  un- 
der a  rule  of  unrestricted  individual  freedom,  and 
whatever  changes  the  institution  of  labor  may  undergo, 
it  cannot  completely  free  itself  from  control  and  super- 
vision. Op])osition  to  restraint  is  inherent  in  the  hu- 
man Ikmpl;  and  manifests  itself  already  in  the  early 
stages  of  the  child.  In  the  case  of  the  laborer  it  finds 
expression  in  discontent  and  unrest,  particularly  when 


I 


THE  PRESENT  LABOR  FERMENT       97 

he  is  led  to  believe  that  the  control  over  him  is  based 
upon  unjust  social  conditions. 

Labor  unrest  is  a  natural  manifestation  varying  in 
intensity  according  to  the  cause  or  causes  which  pro- 
duce it.  It  can  never  be  eliminated  by  newly  evolved 
economic  principles  nor  by  acts  of  the  state  nor  by  any 
other  process,  for  a  social  order  distinguished  by  ab- 
sence of  opposition,  strife,  and  discontent  is  beyond 
the  power  of  any  human  agency  to  establish.  More- 
over, unrest,  whether  it  manifests  itself  in  labor  or 
in  any  part  of  our  social  organization  or  in  the  indi- 
vidual, is  not  an  evil.  On  the  contrary,  it  is  the  pro- 
pelling force  of  all  attainments  and  achievements,  and 
the  progress  and  development  of  the  human  race  are 
marked  and  distinguished  by  stages  of  social  unrest. 
Labor  unrest  is  a  symptom  not  of  disease  and  decline 
but  of  life  and  virility.  It  is  the  expression  of  higher 
aspirations,  and,  threatening  and  disturbing  as  the 
movement  may  seem,  labor  unrest  will  eventually  lead 
to  a  more  perfect  social  order. 


PROFIT   SHARING  AS  A   BASIS   OF  INSUR- 
ANCE AND  PENSIONS 

Profit  sharing,  operated  in  a  spirit  of  mutual  serv- 
ice and  mutual  benefit,  virtually  constitutes  a  partner- 
ship of  muscle,  brain,  and  capital  for  the  purpose  of 
sharing  in  the  result  of  the  joint  operations.  Its  basic 
principle  is  cooperation,  and,  where  cross  purposes 
dominate,  profit  sharing  as  an  instrument  for  a  close 
relationship  of  capital  and  labor  loses  its  force.  To 
be  of  practical  value,  it  must  demonstrate  its  advant- 
ages to  the  laborer  in  tangible  form.  The  mere  appor- 
tionment of  a  small  share  of  the  profits  will  not  effect  a 
permanent  or  decided  change  in  his  attitude  towards 
capital.  It  must  include  features  which  make  him  real- 
ize that  the  employment  not  only  offers  him  a  decent 
existence  but  also  insures  him  a  certain  degree  of  se- 
curity when,  owing  to  old  age  or  disability,  he  is  no 
longer  able  to  earn  a  wage,  or  whenever  he  is  forced 
into  temporary  idleness.  The  average  laborer  cannot 
or  does  not  make  j)ro\ision  against  the  many  con- 
tingencies to  w  liicli  lie  is  exposed,  and  this  is  not  always 
due  to  indifference  or  thriftlessness  but  often  to  the 
close  margin  within  which  he  has  to  manage  his  in- 
come.    Assure  the  laborer  that  the  employment,  aside 

98 


PROFIT  SHARING  99 

from  the  wage,  offers  him  protection  in  infirmity  and 
in  old  age,  and  he  is  more  likely  to  become  permanently 
attached  to  the  service  and  to  the  organization.  The 
question  of  pension  is  also  of  direct  concern  to  capital, 
particularly  at  this  time,  when  the  strong  drift  towards 
state  paternalism  is  likely  to  evolve,  among  other  labor 
measures,  a  labor  pension  system,  and  capital  will  be 
burdened  with  the  cost  in  any  event. 

The  principle  of  profit  sharing  by  itself,  as  a  means 
of  regulating  the  relation  of  capital  and  labor,  can 
prove  a  success  only  where  an  incentive  is  offered  in 
the  substantial  share  of  profit  to  each  individual  la- 
borer, and  this  can  be  accomplished  only  in  organiza- 
tions favored  by  exceptionally  large  profits  and  a  rela- 
tively small  working  force.  Under  normal  operating 
conditions  the  scope  of  a  profit  sharing  system  will 
have  to  be  greatly  broadened,  it  will  have  to  touch  more 
intimately  the  life  of  the  laborer,  if  it  is  to  bring  him 
closer  to  capital.  A  practical  illustration  will  make 
it  clear  that  profit  sharing,  generously  as  it  may  be  ad- 
ministered, will  under  ordinary  circumstances  not  ma- 
terially improve  the  economic  condition  of  the  laborer 
nor  change  the  relation  of  capital  and  labor.  Take  as 
an  example  an  idustrial  concern  with  $500,000  capital, 
employing  500  workers,  and  averaging  an  annual  net 
profit  of  $75,000.  Assume  that  after  deducting  six 
per  cent,  interest  on  the  actual  cash  investment,  the  bal- 
ance of  the  surplus  amounting  to  forty-five  thousand 


icx)  LABOR'S  CRISIS 

dollars  is  divided  equally  between  capital  and  labor. 
Each  of  the  five  hundred  laborers  v^ould  then  receive 
forty-five  dollars,  or  fifteen  cents  a  day  in  addition  to 
his  regular  wage!  But  let  us  assume  that  the  entire 
surplus  of  forty-five  thousand  dollars  is  allotted  to 
labor  and  that  each  laborer  receives  as  his  share  ninety 
dollars  a  year.  Will  that  change  the  mental  attitude  of 
the  laborer  towards  capital  and  bring  about  closer 
affiliation  and  cooperation?  Any  partnership  or  com- 
bination in  which  the  one  party  assumes  the  entire  risk 
of  the  business  for  a  bare  return  of  six  per  cent,  on  its 
investment  and  the  other  party  receives,  in  addition  to 
a  wage  or  salary,  a  share  of  profit  averaging  $90  per 
annum,  would  have  no  sound  basis  for  existence.  It 
should  be  borne  in  mind  that  fifteen  per  cent,  profit  on 
the  capital  invested  is  considered  in  most  instances  a 
satisfactory  operating  result,  and  that  500  laborers  in 
a  plant  requiring  $500,000  cash  capital  form  a  conserv- 
ative average. 

Inasmuch  as  labor  represents  a  multitude,  a  partner- 
ship between  it  and  capital  does  not  seem  feasible  and 
does  not  promise  the  laborer  any  economic  advantage. 
Nor  will  a  strictly  profit  sharing  plan,  with  the  exclu- 
sion of  a  stipulated  wage,  materially  change  the  rela- 
tionship of  capital  and  labor,  for  as  shown  in  the  previ- 
ous illustration,  the  laborer's  share  in  the  division  of 
the  profits  represents  a  comparatively  negligible  figure. 

The  wage  is  inseparable  from  the  employment  of  la- 


PROFIT  SHARING  loi 

bor,  and  whatever  new  principles  may  be  evolved  to 
regulate  and  improve  the  relation  of  capital  and  labor, 
the  wage  factor  will  remain  the  outstanding  feature. 
Profit  sharing  as  a  supplement  to  the  wage,  can  how- 
ever be  made  a  strong  factor  by  giving  it  the  form  of 
a  substantial  benefit  to  the  laborer,  and  by  means  of 
which  he  is  made  to  realize  the  advantages  of  a  close 
bond  with  capital.  The  urgent  need  of  the  laborer  is 
protection  against  contingencies,  and  the  profit  sharing 
system  can  not  only  provide  an  insurance  system  for 
the  laborer  but  also  encourage  and  enforce  thrift,  in 
which  the  laborer  is  often  lacking.  To  make  the  state- 
ment clear,  we  will  again  refer  to  the  foregoing  exam- 
ple, but  in  this  instance  the  annual  net  profit  of  $45,000, 
after  deducting  the  six  per  cent  interest  on  the  invest- 
ment, is  appropriated  to  capital,  labor,  and  labor  con- 
tingency fund,  in  three  equal  parts  of  $15,000  each. 
The  disposition  of  the  one-third  share  appropriated  to 
capital  does  not  here  enter  into  consideration,  and 
might  preferably  be  applied  to  the  various  emergencies 
to  which  capital  is  exposed.  The  one-third  appropri- 
ated to  labor  is,  however,  payable  only  every  two 
years,  with  interest  added  to  it,  thus  virtually  constitut- 
ing a  compulsory  thrift  and  saving  scheme  for  periods 
of  two  years.  The  portion  credited  to  labor  contin- 
gencies forms  the  nucleus  for  the  insurance  fund, 
which  does  not  become  operative  until  the  fund  ex- 
ceeds $30,000.     With  an  annual  average  income  of 


I'fT'-RSITY  OF  SOUTHERN  CALIFORNIA  LIBRARY 


I02  LABOR'S  CRISIS 

$15,000,  which  is  the  one-third  share  of  the  profits, 
and  the  accumulated  fund  of  $30,000,  the  worker  will 
receive  reasonable  protection  in  old  age,  in  sickness, 
and  in  involuntary  nonemployment. 

This  plan  is  not  materially  affected  in  its  essential 
features  whether  it  be  applied  to  a  concern  with  small  or 
with  a  large  capital,  except  that  in  the  former  case 
the  return  on  the  capital  will  show  a  proportionately 
higher  rate  of  profit,  which  will  prove  an  advantage  to 
the  plan.  Personal  service  is  an  important  factor  in 
the  smaller  establishment,  and  those  who  are  directly 
concerned  in  the  management  assume  functions  which 
in  the  large  establishment  are  performed  by  high  sal- 
aried officials  and  employees  thus  entailing  a  large 
o^■erhead  expense.  Whereas  an  average  annual  profit 
of  fifteen  per  cent,  is  considered  a  fair  return  on  an  in- 
vested capital  of  $500,000,  the  same  rate  of  profit 
would  be  considered  inadequate  on  an  invested  capital 
of  $50,000  or,  to  quote  an  extreme  example,  on 
$10,000.  Assuming  that  twenty-five  per  cent,  repre- 
sents the  average  rate  of  profit  of  a  concern  capitalized 
at  $50,000,  its  annual  profit,  after  deducting  six  per 
cent,  on  the  capital  invested,  will  amount  to  $9,500,  in- 
stead of  $4,500,  the  profit  on  a  fifteen  per  cent,  basis. 

The  successful  application  of  the  principles  of  the 
profit  sharing  system  as  outlined,  must  be  tested  not  un- 
der favorable  conditions  but  in  times  of  economic  rcac- 


PROFIT  SHARING  103 

tions,  when  unemployment  and  underemployment  im- 
pose a  heavy  strain  upon  the  laborer  and  upon  the  agen- 
cies which  have  been  created  in  his  interest.  All  or- 
ganizations exposed  to  great  risks  provide  in  times  of 
prosperity  an  ample  reserve  fund  to  cope  with  unfavor- 
able conditions  when  they  arise.  The  labor  conting- 
ency fund,  likewise,  has  to  be  guarded  and  nourished 
with  a  view  of  assisting  the  employee  at  a  critical  time, 
when  his  feeling  of  helplessness  and  despair  is  most 
manifest  and  the  need  of  an  organized  relief  agency  is 
most  urgent.  Moreover  the  thrift  provision,  which 
forms  a  feature  of  this  plan,  will  prove  of  great  benefit 
to  the  employee  in  times  of  adversity,  for  he  will  have 
available  for  his  support  the  accumulated  profits  of 
two  years. 

The  assumption  should  not  be  conveyed  that  this 
roughly  outlined  profit  sharing  plan  is  adapted  to  every 
industry  or  that  it  can  be  applied  to  any  industry  with- 
out some  modification  in  its  operating  features  to  suit 
each  particular  case.  It  has  to  take  into  consideration 
the  type  of  labor,  the  nature  of  the  employment,  the 
character  of  the  industry,  and,  above  all,  the  financial 
resources  and  earning  capacity  of  the  plant.  Profit 
sharing  cannot  be  practically  applied  to  employment 
which  is  intermittent  or  seasonal,  as  in  some  of  the 
needle  trades  or  in  the  canning  industry.  It  does  not 
lend  itself  to  organizations  in  which  woman  labor  pre- 
dominates, because  the  service,  as  a  rule,  is  neither  con- 


I04  LABOR'S  CRISIS 

tinuous  nor  permanent.  It  cannot  be  applied  to  the 
operation  of  labor  which  terminates  with  the  comple- 
tion of  a  project,  like  the  construction  of  a  building. 

The  profit  sharing  plan  presented  here  is  particularly 
adapted  to  industries  and  mercantile  institutions  with 
an  adequate  working  capital  and  yielding  a  fair  average 
profit.  The  capital  must  be  adequate  to  insure  profit- 
able operation  of  the  industry  and  to  safeguard  it 
against  reverses  and  times  of  financial  distress.  The 
profit  must  be  attractive,  for  it  forms  the  basis  and 
the  life  of  profit  sharing,  as  it  is  also  the  main  incen- 
tive for  mutual  cooperation.  While  the  scope  of  the 
plan  may  be  broadened  or  modified  to  adjust  it  to  the 
requirements  of  the  industry  or  to  the  character  of  the 
employment,  it  must  be  based  on  the  fundamental  prin- 
ciple of  a  fair  and  an  open  division  of  the  profits,  and 
in  a  manner  which  will  safeguard  not  only  the  em- 
ployee but  also  the  organization.  The  result  of  this 
close  cooperation  will  be  made  evident  to  the  laborer 
through  the  benefits  which  the  profit  sharing  plan  of- 
fers him,  and  in  the  absence  of  which  he  and  his  fam- 
ily would  be  seriously  afYected. 

Aside  from  the  betterment  which  a  profit  sharing 
system  of  this  character  promises  to  effect  in  the  eco- 
nomic condition  of  the  laborer,  it  will  also  modify,  if 
not  eliminate,  a  deep-rooted  and  generally  recognized 
cause  of  the  antagonism  and  prejudice  of  labor  towards 
capital.     Exploitation  of  labor  by  capital  is  not  a  the- 


PROFIT  SHARING  105 

ory  confined  exclusively  to  the  followers  of  Karl  Marx. 
In  its  broader  sense,  as  applied  to  the  relation  of  em- 
ployer and  employee,  or  master  and  servant,  it  has 
fornied  the  fiery  topic  of  the  social  reformers  of  all 
time.  It  is  inbred  in  all  those  who  toil  for  a  living,  and 
it  is  also  the  popular  conception,  as  well  as  the  sci- 
entific interpretation,  of  many  of  the  evils  arising  from 
industrial  and  commercial  development.  It  is  claimed, 
and  not  unjustly,  that  in  the  production  of  wealth,  la- 
bor is  not  receiving  its  due  share,  and  the  impetus  of 
the  widespread  labor  unrest  gains  its  force  from  this 
conviction.  By  no  other  means  than  by  an  open  and 
fair  division  of  the  profits  of  the  joint  efforts  of  cap- 
ital and  labor  can  this  conviction  be  shaken,  and  can 
the  theory  of  the  exploitation  of  labor  by  capital  lose 
its  force  and  cease  to  inflame  the  passions  of  the 
masses. 

The  advantages  of  a  comprehensive  profit  sharing 
system  along  the  lines  indicated  here  may  be  summar- 
ized as  follows : 

1,  Labor  and  capital  will  be  actuated  by  mutual  in- 
terest and  by  close  cooperation,  which  will  result  in 
higher  labor  efficiency  and  in  decreased  operating  cost, 
in  greater  labor  stability  and  in  lessened  labor  restless- 
ness. 

2.  In  the  popular  mind  capital  will  no  longer  be  char- 
acterized by  exploitation  of  labor  or  by  injustice  in 
withholding  from  \3.\)gT  its  du^  share. 


io6  LABOR'S  CRISIS 

3.  The  worker  will  receive  reasonable  protection 
against  many  of  the  contingencies  to  which  he  is  ex- 
posed, whether  disability,  old  age,  temporary  unem- 
ployment, or  underemployment. 

4.  Capital  will  to  a  large  extent  be  compensated  for 
its  reduced  income  by  the  greater  freedom  from  strikes 
and  other  labor  disturbances  and  by  the  greater  secur- 
ity of  its  investment  and  stability  of  its  income. 


LABOR  UNREST  AS  A  CHECK  UPON  INDUS- 
TRIAL CONCENTRATION 

The  nineteenth  century  was  characterized  by  a 
marked  concentration  of  the  productive  powers  and  of 
industrial  enterprise  in  large  industrial  towns.  The 
drift  of  labor  from  the  rural  districts  to  the  large  towns 
became  irresistible,  and  neither  the  inhuman  working 
nor  the  wretched  living  conditions,  which  were  the  lot 
of  the  workingman  in  the  congested  centers,  could 
check  this  movement.  The  cause  cannot  be  attributed 
solely  to  the  attractions  which  city  life  exerts  on  the 
young ;  nor  can  it  be  attributed  solely  to  economic  rea- 
sons and  to  the  greater  and  more  varied  opportunities 
for  employment  which  large  industrial  centers  offer. 
The  movement  has  largely  a  psychological  basis  and 
resulted  from  unrest  and  an  irresistible  craving  for  a 
change  from  the  existing  environments,  regardless  of 
the  danger  or  suffering  entailed.  It  was  impelled  by 
the  same  psychological  forces  which  induced  the  farmer 
to  abandon  his  comfortable  homestead  in  the  East,  in 
the  middle  of  the  last  century,  and  endure  the  trials  and 
hardships  of  founding  a  new  home  in  the  wilds  of  the 
far  West.  It  was  not  solely  hunger  and  the  lure  of 
plunder  which  carried  the  Goths  across  the  Alps  or 

107 


io8  LABOR'S  CRISIS 

the  Normans  to  the  Mediterranean  shores.  Nor  were 
the  masses  of  the  Crusaders  inspired  purely  by  desire 
for  adventure.  All  those  historical  movements  were 
prompted  by  the  pressure  of  unrest,  which  is  inherent 
in  the  human  being  and  forms  the  strongest  dynamic 
force  in  shaping  the  destiny  of  nations  as  well  as  of 
the  individual. 

The  present  labor  unrest  presents  the  same  phenom- 
enon, but  it  does  not  manifest  itself  in  migration;  it 
takes  the  form  of  a  revolt  against  the  existing  social 
order.  Its  symptom  is  a  deep-rooted  and  unrestrain- 
able  discontent,  which  neither  a  higher  standard  of 
living  nor  a  largely  increased  wage  nor  reduced  hours 
of  labor  can  appease.  Whatever  remedy  or  palliative 
is  applied,  it  acts  like  a  stream  of  water  on  a  burning 
oilfield.  It  cannot  be  restrained,  any  more  than  can  a 
volcanic  eruption.  The  present  unrest  will  take  its 
own  course  and  lead  to  a  new  social  order,  which, 
though  it  may  not  conform  with  all  the  visions  of  la- 
bor, will  be  based  upon  new  social  and  economic  prin- 
ciples, and  the  performance  of  labor  will  no  longer  in- 
volve occupying  a  lower  and  degraded  rank  in  society. 
The  dignity  of  labor  will  have  a  new  meaning  and  a 
greater  importance,  and  necessity  will  impose  upon 
every  individual,  whatever  the  rank  and  occupation,  a 
certain  amount  of  sclf-hclj)  which  now  devolves  upon 
hired  labor. 

'Jhe   widespread   unrest  is  likely  to  cause,   among 


LABOR  UNREST  109 

other  changes,  a  decided  check  on  industrial  develop- 
ment in  the  congested  cities,  which  form  the  storm  cen- 
ters of  labor  agitation,  as  they  are  also  the  hotbeds  for 
the  propagation  of  the  most  destructive  radical  theo- 
ries. Industrial  concentration  in  the  large  cities  was 
induced  by  a  number  of  factors,  the  most  important  of 
which  were  a  large  supply  of  labor  and  convenient 
transportation  for  supplies  and  for  the  finished  pro- 
ducts. But,  important  as  those  factors  are,  they  do  not 
offset  in  times  of  chronic  labor  disturbance  the  disad- 
vantages and  risk  of  operating  an  industry  exclusively 
in  one  locality,  thus  exposing  the  entire  organization 
to  the  influence  of  labor  agitation.  To  use  a  popular 
phrase,  the  concern  is  putting  all  of  its  eggs  into  one 
basket  and  is  thereby  risking  the  same  danger  as  in  the 
egg  story. 

The  demoralizing  and  disintegrating  effect  of  the 
prevailing  labor  conditions  will  force  upon  many  an 
industrial  concern  the  policy  of  dividing  its  one  operat- 
ing unit  into  several  small  units  and  locating  them  in 
different  towns.  This  will  not  exempt  the  concern 
from  strikes  and  other  labor  troubles,  but  it  is  not  likely 
that  all  the  units  will  be  simultaneously  affected  by 
labor  disturbance. 

The  small  town  offers  many  advantages,  and  par- 
ticularly in  the  relation  of  capital  and  labor,  which 
work  in  greater  harmony  than  in  large  cities.  The 
growth  and  development  of  the  small  industrial  town 


no  LABOR'S  CRISIS 

is  closely  linked  with  the  prosperity  of  its  industries, 
and  the  decline  of  the  latter  is  invariably  followed  by 
the  decline  of  the  former.  It  uses  every  effort  to  at- 
tract and  foster  those  industries,  and  in  many  instances 
the  inhabitants  become  stockholders.  Labor  is  more 
or  less  under  the  influence  of  this  friendly  public  senti- 
ment and  good  will,  and  loyalty  toward  the  employer  is 
its  marked  characteristic.  It  is  for  this  reason  that 
organized  labor  does  not  gain  a  strong  foothold  in 
small  industrial  towns  and  in  manufacturing  villages; 
or  at  least  it  cannot  exert  its  power  and  its  influence, 
except  when  it  appeals  to  the  foreign  laborer,  who  lacks 
the  spirit  and  the  local  pride  of  the  native  inhabitant. 
The  good  will  of  the  native  towards  his  employer  can, 
however,  be  easily  forfeited  by  abusive  and  arbitrary 
treatment,  but  under  considerate  management  he  will 
resist  and  even  resent  outside  influences  which  may 
tend  to  disturb  this  relationship. 

The  environment  of  the  small  town  promotes  a  type 
of  labor  with  marked  differences  from  the  proletariat 
of  the  large  cities.  The  nomadic  spirit  rarely  mani- 
fests itself,  for  the  narrow  industrial  field  with  its  lim- 
ited opportunities  does  not  encourage  frequent  changes 
of  employment  or  of  occupation.  In  many  instances 
the  entire  family  works  in  the  same  establishment,  the 
son  often  succeeding  the  father  in  the  same  occupation. 
This  type  of  help  has  particular  value,  because  it  pro- 
motes   cooperation,     efficiency,    and    labor    stability. 


LABOR  UNREST  iii 

Regular  habits  and  an  orderly  life  are  characteristic 
not  only  of  the  inhabitant  of  the  rural  district  but  also 
of  the  laborer  of  the  small  town.  Community  and 
neighborhood  spirit  is  strongly  developed  and  the  la- 
borer takes  a  direct  interest  in  all  local  matters,  whether 
social,  political,  or  religious.  His  home  is  generally 
within  easy  walking  distance  from  the  factory,  thus 
saving  not  only  time  and  expense  but  permitting  him 
to  take  his  noon  meal  at  home. 

The  advantages  which  the  small  town  offers  to  in- 
dustrial enterprise  and  to  the  laborer  are  obvious,  but 
they  have  not  overcome  the  most  potential  factor  which 
attracts  industrial  enterprise  to  the  large  cities,  namely, 
ample  supply  of  labor.  Although  less  than  forty  per 
cent,  of  the  total  population  of  the  United  States  dwell 
in  cities  of  over  ten  thousand  inhabitants,  those  cities 
employ  sixty-seven  per  cent,  of  the  industrial  labor,^ 
Density  of  population  and  industrial  concentration  ex- 
ert reciprocal  attraction  upon  each  other.  The  large 
cities  attract  industries  because  of  the  abundance  of 
labor,  and  in  turn  the  abundance  of  industries  attracts 
labor.  This  reciprocal  action  can  be  interrupted  and 
counteracted  only  by  causes  which  will  seriously  impair 
industrial  operation  in  large  cities,  like  scant  labor 
supply  and  low  labor  efficiency.  Widespread  strikes 
and  a  greatly  diminished  and  deteriorated  supply  of 

^Abstract   of   the   Census    of   Afanw/'acfMr^r.y,    1914,    published 
1917,  table  180,  p.  284. 


112  LABOR'S  CRISIS 

labor  will  not  only  force  a  redistribution  of  labor  and 
remove  it  from  the  disturbing  influence  of  the  large 
labor  centers  but  will  also  decentralize  many  of  the 
large  industries  and  compel  the  operation  of  small 
manufacturing  units  distributed  in  small  towns. 

It  may  be  argued  that  a  group  of  widely  scattered 
manufacturing  units,  placed  under  a  central  control 
and  management,  cannot  be  as  economically  and  as 
efficiently  managed  as  a  single  large  unit.  This  is, 
however,  entirely  determined  by  the  nature  of  the  in- 
dustry. Many  of  the  leading  industrial  organizations, 
as  for  instance  the  American  Woolen  Company,  the 
American  Cigar  Company,  the  American  Sugar  Com- 
pany, are  entirely  dependent  for  the  products  upon  a 
number  of  relatively  small  factories  located  at  differ- 
ent points  in  the  country.  It  may  also  be  argued  that 
the  limited  supply  of  labor  of  the  small  town  restricts 
industrial  operation  and  expansion.  In  answer,  it  is 
only  necessary  to  point  to  some  of  the  war  industries, 
which  were  located  at  points  where  neither  town  nor 
labor  existed,  but  they  were  nevertheless  able  to  organ- 
ize quickly  large  labor  forces,  attracted  from  near  and 
distant  labor  centers  by  a  higher  wage. 

Aside  from  the  advantages  of  better  living  condi- 
tions the  worker  of  the  small  town  has  also  the  ad- 
vantage of  the  higlicr  ])urchasing  power  of  the  wage 
and  of  a  lower  living  cost  due  to  lower  rents  and  to  les- 
sened  requirements   in   dress,   amusements,   car   fare, 


LABOR  UNREST  113 

etc.  Moreover  in  the  small  town  the  laborer  is  raised 
to  the  dignity  of  an  active  and  a  desirable  member  of 
the  community ;  whereas  in  large  labor  centers  he  loses 
his  individual  identity  and  is  reduced  to  an  insignifi- 
cant mechanical  unit  of  the  productive  machinery. 
Most  important  of  all  to  both  capital  and  labor  is  the 
more  harmonious  relationship  which  exists  between 
them  in  the  small  town,  and  which  is  less  exposed  to 
the  influence  of  trade  unionism  and  to  disturbinof  la- 
bor  agitation  than  in  large  cities. 

In  the  face  of  these  facts  the  conclusion  seems  jus- 
tified that  the  present  labor  unrest  will,  among  other 
revolutionary  changes,  restore  as  a  productive  factor 
the  importance  of  the  factory  village  and  the  small  in- 
dustrial town.  It  would  also  follow  that  with  increas- 
ing opportunities  for  profitable  employment  the  laborer 
from  the  rural  districts  is  more  likely  to  be  attracted 
to  the  factory  village  and  to  the  small  industrial  town, 
and  hence  will  cause  a  redistribution  of  labor  and  les- 
sen the  drift  from  the  rural  districts  to  the  large  labor 
centers. 


MORAL  ECONOMICS  AS  APPLIED  TO  LABOR 

Social  and  economic  conditions  are  closely  related 
and  act  in  strong  sympathy  with  each  other.  Social 
revolutions  are  invariably  accompanied  by  economic 
revolutions  and  vice  versa.  The  introduction  of  power 
machinery  in  the  early  part  of  the  nineteenth  century 
had  far-reaching  social  consequences,  not  the  least  of 
which  were  the  removal  of  the  family  from  the  home 
to  the  factory,  thus  diminishing  the  influence  and  im- 
portance of  home  life,  and  the  influx  of  rural  popula- 
tions to  industrial  towns,  resulting  in  congestion  and  in 
the  many  social  evils  due  to  crowding.  Social  prog- 
ress in  modern  times  has  effected  a  revolution  in  labor 
conditions,  for  it  has  not  only  eliminated  child  labor, 
restricted  female  labor,  curtailed  male  labor,  and  lifted 
the  living  and  working  standard  of  the  workingman  to 
a  higher  level,  but  it  has  changed  and  readjusted  the 
relation  of  capital  and  labor.  The  nineteenth  century 
portrayal  of  capital  as  the  stern  and  arrogant  autocrat 
and  labor  as  the  downtrodden  victim  would  ill  fit  mod- 
ern labor  conditions.  Labor  is  no  longer  treated  as  a 
mere  commodity  reducible  to  dollars  and  cents,  but  is 
recognized  as  a  strong  living   force,  susceptible  and 

114 


MORAL  ECONOMICS  115 

responsive  to  every  human  impulse  and  demanding  in 
its  operation  the  most  judicious  care  and  attention. 
Social  progress  has  increased  the  dignity  and  import- 
ance of  labor  and  it  has  also  lessened  the  value  and  in- 
fluence of  capital.  The  leveling  process  has,  however, 
not  reached  the  point  of  closer  community  of  interest, 
but  it  has  resulted,  so  far  as  capital  is  concerned,  in  a 
decided  change  of  attitude  tow^ards  labor. 

The  spirit  of  indifference  and  arrogance  which  at  one 
time  distinguished  capital  is  giving  way  to  a  friendly 
and  benevolent  interest  in  the  physical  and  moral  wel- 
fare of  the  workingman.  Capital  no  longer  attempts 
to  control  labor  by  drastic  or  arbitrary  means  but  ap- 
plies the  moral  code  to  questions  at  issue  with  labor. 
It  does  not  belittle  the  value  of  this  moral  awakening 
that  it  has  not  been  aroused  by  agitation  or  legislation 
or  prompted  by  philanthropic  motives ;  on  the  contrary, 
the  change  is  likely  to  be  permanent  because  it  springs 
mainly  from  necessity  and  self-interest.  The  old  eco- 
nomic principles  and  policies  can  no  longer  be  success- 
fully applied  to  modern  industrial  operations  in  view  of 
the  diminished  supply  and  the  greater  power  of  labor. 
The  control  of  labor  is  now,  more  than  ever,  a  difficult 
problem,  which  cannot  be  solved  by  the  application  of 
selfish  business  principles  and  methods,  but  must  be  in- 
fluenced by  ethical  principles  or  what  may  be  termed 
"  moral  economics."  The  study  of  the  labor  question, 
particularly  as  related  to  labor  welfare,  has  become  a 


ii6  LABOR'S  CRISIS 

special  science,  not  exclusively  confined  to  social  re- 
formers and  political  aspirants  but  also  receiving  the 
serious  attention  of  the  employers  of  labor  as  an  essen- 
tial economic  requirement  of  modern  industrial  enter- 
prise. 

Labor  welfare  is  not  only  the  index  of  social  prog- 
ress but  is  becoming  recognized  as  a  basic  political  and 
economic  principle  in  all  civilized  countries.  Germany 
and  England  have  been  far  in  advance  of  the  United 
States  in  this  movement,  and  some  of  the  measures,  as 
old  age  pensions,  permanent  disability  provisions,  un- 
employment and  life  insurance,  come  close  to  the  prin- 
ciples and  doctrines  advocated  by  socialism.  In  these 
two  countries,  however,  the  advance  of  labor  welfare 
is  the  outgrowth  of  political  aims  and  policies,  whereas 
in  the  United  States  it  is  due  largely  to  the  develop- 
ment of  an  economic  need  and  not  of  a  political  creed. 
There  is  also  this  difference  that  in  the  European  coun- 
tries labor  welfare  as  a  creation  of  the  state  is  confined 
within  the  prescribed  limits  of  the  laws,  beyond  which 
it  is  not  supplemented  or  stimulated  to  any  large  ex- 
tent by  private  agencies.  In  the  United  States  it  is  a 
voluntary  service  beyond  the  legal  requirements  and  is 
siii)i)()rtc(l  exclusively  by  capital  as  the  means  of 
strengthening  its  relationship  with  labor.  Capital  has 
learned  from  practical  experience  and  observation  that 
labor  is  more  contented  and  more  tractable  under  a 
benevolent  protectorate  than  under  a  stern  mastership, 


MORAL  ECONOMICS  117 

and  that  a  community  interest  and  a  spirit  of  coopera- 
tion and  loyalty  can  be  awakened  thereby. 

That  this  movement  is  not  sporadic  nor  confined  to 
a  few  large  industries  is  evidenced  by  the  fact  that  the 
New  York  Public  Library  has  on  file  a  list  of  seven 
hundred  and  fifty  concerns  which  have  introduced  some 
form  of  labor  welfare  work.  Some  confine  themselves 
to  special  benefits,  such  as  pensions,  sick  benefits,  or  life 
insurance;  others  cover  almost  the  entire  field  of  wel- 
fare work  in  a  most  scientific  manner,  maintaining 
well-organized  research  bureaus  for  the  purpose  of  im- 
proving the  living  and  working  conditions  of  their  em- 
ployees. Every  possible  safeguard  is  applied  to  pro- 
tect employee's  health  and  life  at  his  occupation  and 
in  his  home.  Well-equipped  hospitals,  dispensaries, 
and  dental  clinics  are  maintained  for  his  benefit,  and 
some  of  the  concerns  provide  medical  attendance, 
trained  nurses,  home  visitors,  whenever  they  are  re- 
quired by  the  employee  or  his  family.  Nor  are  his 
educational,  recreational,  or  even  cultural  needs  neg- 
lected. In  many  of  the  large  industries,  industrial 
schools  and  schools  for  foreigners  are  conducted,  and 
club  houses  with  libraries,  gymnasiums,  theaters,  and 
also  outdoor  facilities  for  every  sport,  including  tennis 
courts,  are  at  the  disposal  of  the  employee.  Marked 
improvement  is  being  effected  in  the  housing  of  the 
workers,  and  in  the  more  recently  organized  industries 
this  feature  has  received  careful  study,  with  a  view  of 


ii8  LABOR'S  CRISIS 

making  the  home  attractive,  so  far  as  comfort  and 
modern  conveniences  are  concerned.  Restaurants  are 
maintained  in  most  of  the  large  industries,  serving 
food  at  cost  and  even  below  cost,  and  the  following  few 
items  copied  from  a  lunch  card  of  a  factory  restaurant 
in  Rochester,  New  York,  may  be  accepted  as  typical 
of  many,  at  least  prior  to  1917  : 

Roast   beef    5  cents 

Boiled  ham  5  cents 

Mashed    potatoes    3  cents 

Assorted   cakes    i  cent 

Bananas   2  cents 

Milk    2  cents 

Ice  cream    3  cents 

Apple  pudding  5  cents 

Some  of  these  restaurants  offer  a  complete  lunch  con- 
sisting of  soup,  meat,  two  vegetables,  dessert,  tea  or 
milk,  and  including  bread  and  butter,  at  a  price  ranging 
from  twenty-five  to  forty  cents. 

Apart  from  all  other  benefits,  some  of  the  concerns 
have  introduced  profit  sharing,  or  cooperative  plans, 
and  if  we  may  judge  from  the  example  of  the  United 
vStates  Steel  Company,  which  had  in  1913  over  35,000 
shareholders  among  its  employees  with  an  aggregate 
holding  of  over  125,000  shares,  later  is  availing  itself 
of  this  achantage  (|uitc  freely.  This  same  concern 
spent  on  welfare  work  in  19 16  approximately  ten  mil- 
lion dollars,  and  among  other  things  maintains  a  school 
system   in   Gary,   Indiana,   for  the  benefit  of  its  em- 


MORAL  ECONOMICS  119 

ployees,  which  is  recognized  the  world  over  as  a  model 
of  its  kind.  With  many  concerns  welfare  work  forms 
a  notable  feature  of  the  organization,  and  is  being  ex- 
tended and  perfected,  notwithstanding  the  great  ex- 
pense it  entails.  The  welfare  system  is  the  pride  and 
the  outstanding  feature  of  the  organization,  upon 
which  large  sums  are  freely  expended  without  impos- 
ing an  additional  tax,  or  at  least  any  material  tax, 
upon  the  beneficiary.  It  will  be  observed  that  the  re- 
sponsibility is  not  confined  to  the  limits  of  the  factory, 
nor  does  it  end  with  the  day's  work  of  the  employee. 
Ample  opportunities  are  offered  to  him  during  his  lei- 
sure hours  for  indoor  and  outdoor  diversion,  for  phys- 
ical and  intellectual  improvement,  and  for  social  inter- 
course with  his  neighbors  under  attractive  conditions. 

Capital  is  recognizing  that  the  elevation  of  labor 
means  the  elevation  of  the  industry  and  increases  the 
economic  value  of  the  latter  by  strengthening  its  per- 
manency and  raising  its  effectiveness.  Above  all  cap- 
ital sees  that  labor  efficiency  is  largely  determined  by 
the  spirit  which  actuates  the  laborer  in  the  perform- 
ance of  his  work,  and  that  cooperation  and  loyalty  can 
be  developed  and  stimulated  only  where  the  employer 
has  gained  the  good  will  of  his  employee. 

After  this  brief  outline  of  labor  welfare  w^ork  the 
conclusion  is  justified  that  capital  is  doing  its  share  to 
bring  about  a  closer  relationship  with  labor,  and  the 
question  naturally  suggests  itself  as  to  what  is  the  lat- 


I20  LABOR'S  CRISIS 

ter's  attitude  under  the  circumstances  described.  At 
the  outset  it  is  necessary  to  point  out  that  labor  unions 
are  out  of  sympathy  with  the  movement,  the  objec- 
tion being  based  upon  the  following  two  reasons :  first, 
that  the  welfare  of  the  individual  laborer  can  be  pro- 
moted only  by  an  adequate  wage;  second,  that  the  cost 
of  welfare  work  constitutes  a  tax  on  the  wage  and  be- 
comes a  factor  in  fixing  it.  The  first  contention  would 
seem  plausible  if  it  could  be  demonstrated  that  capital 
is  cultivating  this  labor  welfare  work  as  a  cover  for  a 
low  wage  or  for  the  purpose  of  reconciling  labor  with 
a  low  wage.  This,  however,  would  defeat  the  very 
aim  of  capital  of  developing  higher  labor  efficiency, 
the  absence  of  which  is  impairing  every  industry  and 
the  development  of  which  demands,  first  of  all,  an  ade- 
quate wage.  Labor  efficiency  is  largely  a  question  of 
living  conditions,  and  where  the  latter  are  low  the  for- 
mer must  also  suffer.  Moreover  the  term  adequate 
wage  can  be  variously  interpreted,  and  may  be  said  to 
be  determined  by  two  factors;  the  amount  of  the  wage 
and  the  disposition  of  the  wage.  The  wage  may  be 
ever  so  liberal  and  still  prove  inadequate  if  not  judi- 
ciously managed,  which  unfortunately  is  the  case  with 
a  large  part  of  the  working  class,  and  which  is  also  the 
cause  of  keeping  many  of  them  in  the  grip  of  poverty. 
The  wage  cannot,  however,  be  considered  adequate  if 
with  reasonable  care  it  fails  to  insure  the  essentials  for 
a  decent  existence,  or  if  it  is  insufficient  to  maintain  the 


MORAL  ECONOMICS  121 

worker  and  his   family  in  proper  physical  condition. 

The  second  reason  advanced  by  the  labor  unions, 
that  the  welfare  movement  constitutes  a  tax  on  the 
wage,  could  be  accepted  as  a  fact  only  if  the  wages  in 
the  industries  supporting  labor  welfare  were  lower 
than  in  those  in  which  tJiis  factor  does  not  exist.  It 
appears,  however,  to  be  established  that  the  highest 
wage  is  paid  in  the  industries  in  which  the  highest  labor 
efficiency  prevails,  and  in  most  of  these  industries 
labor  welfare  work  is  a  prominent  feature.  The  atti- 
tude of  organized  labor  cannot  be  accepted  as  reflecting 
the  sentiment  of  the  individual  worker,  who  avails 
himself  freely  of  the  many  advantages  of  organized  la- 
bor welfare,  not  however  without  a  lurking  suspicion 
regarding  the  motives  of  the  paternal  innovation. 
Suspicion  is  a  strongly  developed  trait  in  the  average 
laborer,  and  this  is  largely  due  to  the  nature  of  the  re- 
lationship of  capital  and  labor. 

Moral  economics  is  based  upon  the  theory  that  a 
harmonious  and  friendly  relationship  between  capital 
and  labor  can  be  maintained  and  that  labor  efficiency 
can  be  promoted  only  by  elevating  the  living  and  the 
working  standard  of  the  individual  laborer,  and  that 
discontent  is  lessened  and  permanency  of  labor  in- 
sured by  providing  him  with  decent  and  attractive  sur- 
roundings, which  shall  include  not  only  a  comfortable 
home  but  also  the  necessary  facilities  for  self-improve- 
ment, for  diversion,  and  for  social  intercourse  with  his 


122  LABOR'S  CRISIS 

neighbors  under  conditions  which  tend  to  develop  a 
neighborhood  and  civic  spirit.  It  maintains  above  all 
else  that  his  wage  shall  be  adequate  to  provide  him  and 
his  family  with  necessities  and  the  ordinary  require- 
ments for  a  decent  existence.  No  sacrifices  are  re- 
quired of  labor  under  the  changed  conditions,  which 
offer  the  worker  increased  opportunities  and  privileges 
without  imposing  upon  him  an  additional  financial  bur- 
den, which  capital  voluntarily  assumes  in  promoting 
labor  welfare. 

The  cold  fact  must  be  recognized  that  altruistic  prin- 
ciples cannot  play  an  important  part  in  industrial  and 
commercial  life,  and  that  the  laws  of  competition  are 
tyrannical  and  are  not  influenced  or  softened  by  senti- 
mental impulses.  It  may  therefore  be  taken  for 
granted  that  the  cost  of  maintaining  industrial  labor 
welfare  enters  into  the  cost  of  the  finished  product,  and 
becomes  an  important  factor,  particularly  in  times  of 
close  competition,  when  the  operating  cost  may  be  said 
to  determine  the  success  or  failure  of  industrial  and 
commercial  enterprise.  The  cost  of  maintaining  or- 
ganized labor  welfare  is,  however,  in  most  instances 
offset  by  lessened  labor  turnover,  by  increased  labor 
efficiency,  and  by  a  higher  intellectual  and  moral  stand- 
ard of  the  laborer.  For  instance,  one  of  the  most  seri- 
ous problems  with  which  capital  has  to  contend  is  the 
restless  and  nomadic  spirit  which  characterizes  a  large 
clement  of  the  working  class,  due  partly  to  discontent 


MORAL  ECONOMICS  123 

with  surroundings  and  the  monotony  of  the  occupation 
but  often  also  to  shiftlessness  and  to  a  roving  disposi- 
tion. It  is  not  always  the  desire  for  self -betterment 
but  rather  a  confirmed  habit  of  unrest  which  prompts 
the  frequent  changes  of  employment,  infecting  in  some 
instances  with  this  spirit  a  large  part  of  the  working 
organization  of  a  plant.  Others  again  will  work  only 
spasmodically,  according  to  their  needs  or  their  whims, 
and  this  becomes  particularly  pronounced  in  times  of 
prosperity,  when  the  larger  income  encourages  many 
intervals  of  self-imposed  idleness.  Without  ambition 
to  elevate  themselves  and  their  family,  without  special 
wants  or  desires,  they  lead  a  happy-go-lucky  existence, 
exerting  themselves  only  when  their  needs  become  ur- 
gent. These  two  conditions  constitute  a  most  disturb- 
ing factor,  not  only  affecting  every  industrial  organiza- 
tion by  lowering  labor  and  operating  efficiency  but  also 
seriously  injuring  society  by  increasing  and  intensify- 
ing poverty.  This  type  is,  however,  not  beyond  re- 
demption, for  under  proper  environment  and  healthy 
influence  his  habits  are  gradually  modified  and  he  is 
less  inclined  to  lead  a  nomadic  life  and  shirk  work. 

It  is  apparent  that  organized  labor  welfare  offers 
the  laborer  many  advantages,  not  the  least  of  which  are 
the  opportunities  for  self-improvement  and  for  a  sane 
existence.  It  offers  capital  advantages  in  a  more  cor^ 
dial  relationship  with  labor  and  in  promoting  higher 
labor  efficiency.     But  it  also  offers  a  decided  benefit 


124  LABOR'S  CRISIS 

to  the  state  in  training  a  more  intelligent  and  better 
fitted  citizenship,  and  in  reducing  the  outlay  for  main- 
tenance of  corrective  institutions.  The  greatest  benefit 
of  organized  labor  welfare  is  its  tendency  to  make  labor 
more  contented  and  thereby  lessen  the  pressure  of  the 
existing  labor  unrest. 


HANDLING  OF  LABOR  IN  SMALL  PLANTS 

Organized  labor  welfare,  owing  to  its  great  cost,  is 
necessarily  confined  to  organizations  with  large  capital 
and  employing  large  forces  of  labor.  The  special 
census  of  manufactures  in  1914  ^  showed  that  only  31 
per  cent,  of  the  wage  earners  in  the  United  States  are 
employed  in  1996  establishments  averaging  more  than 
500  laborers  each.  The  remainder,  constituting  69 
per  cent,  of  all  the  industrial  labor,  is  distributed  in 
smaller  groups  of  less  than  500  laborers  in  240,939 
establishments,   averaging  approximately  20  laborers 

1  The  following  part  of  table  193  in  the  Abstract  of  the  Census 
of  Manufactures,  1914,  p.  391,  shows  the  total  number  of  es- 
tablishments in  the  United  States  in  1914,  grouped  according 
to  the  average  number  of  wage  earners  employed  and  the  per- 
centage of  wage  earners  in  each  group. 

Per 
Wage  earners  Number  of        Wage  earners      cent,  of  total 

per  establishment     establishments  (average  number)  wage  earners 

I  to  5 140,971  317,216  4.5 

6  to  20 54,379  606,594  8.6 

21  to  50 22,932  742,529  10.6 

51  to  100 11,079  791,726  11.3 

1 01  to  250 8,470  1,321,077  18.8 

251  to  500 3,108  1,075,108  15.3 

501  to  1000 1,348  926,828  13.2 

Over  1000  648  1,255,259  17.8 

125 


126  LABOR'S  CRISIS 

each.  The  fact  that  69  per  cent,  of  all  labor  is  dis- 
tributed in  240,939  small  establishments  is  a  very  vital 
point,  and  has  a  special  bearing  on  the  economic  and 
social  importance  of  the  small  industrial  unit  and  on 
labor  problems  in  general. 

The  figures  clearly  establish  the  following  facts  : 

1.  The  dominating  factor,  so  far  as  the  employment 
of  industrial  labor  in  the  United  States  is  concerned,  is 
not  the  large  manufacturing  unit  employing  over  500 
wage  earners  but  the  groups  of  small  units  each  em- 
ploying less  than  500. 

2.  The  largest  percentage  of  industrial  labor  is  em- 
ployed in  the  medium  sized  establishments,  each  em- 
ploying 100  to  250,  with  a  total  of  1,321,077  wage 
earners,  against  a  total  of  1,255,259  employed  in  es- 
tablishments of  over  1000  wage  earners. 

The  character  and  type  of  labor  differ  not  only  be- 
tween the  large  and  small  establishments  but  also  be- 
tween the  large  and  small  cities  and  towns,  just  as  the 
rural  differs  from  the  urban  inhabitant.  The  differ- 
ence manifests  itself  in  the  mental  attitude  of  the  la- 
lx)rer  and  in  the  performance  of  his  work.  The  rela- 
tionship of  capital  and  labor  assumes  a  different  aspect 
according  to  the  circumstances  and  conditions  under 
which  labor  is  performed.  It  would  seem  that,  not- 
withstanding the  advantages  and  the  inducements 
which  many  of  the  large  industries  hold  out  to  the 
laborer,  such  as  organized  labor  welfare,  profit  shar- 


LABOR  IN  SMALL  PLANTS  127 

ing,  and  industrial  democracy,  he  becomes  more  at- 
tached to  the  small  plant.  The  cause  can  be  found  in 
the  difference  of  the  working  conditions,  which  are 
largely  influenced  by  the  closer  touch  with  the  em- 
ployer, and  in  their  psychological  effect  on  the  laborer. 
In  the  large  establishment  the  individual  laborer  is  re- 
duced almost  to  a  cipher  in  the  swarm  of  coworkers, 
each  forming  a  mechanical  unit  in  the  operation  of  the 
vast  machine.  The  human  element  is  almost  entirely 
lacking  in  the  relationship  of  employer  and  employee, 
discipline  is  rigid,  individuality  is  suppressed,  merit  is 
slow  to  be  recognized,  and  promotion  and  betterment 
are  remote.  The  monotony  and  sameness  of  occupa- 
tion are  intensified  by  the  restraint  of  close  supervision 
and  by  clock-like  control  over  the  movements  and  ac- 
tion of  the  individual  laborer.  In  the  small  establish- 
ment, on  the  other  hand,  the  human  element  is  strongly 
manifest,  not  only  in  the  greater  freedom  of  the  worker 
and  in  the  more  intimate  companionship  with  his  fel- 
low worker,  but  in  the  closer  touch  with  the  employer, 
to  whom  the  laborer  can  present  his  grievances  and 
to  whom  he  often  applies  in  trouble  and  in  misfortune. 
Individual  merit  has  greater  opportunity  for  recogni- 
tion, and  monotony  and  strain  of  occupation  are  re- 
lieved by  greater  freedom  and  relaxed  supervision. 
All  this  may  not  promote  high  operating  efficiency  but 
it  makes  the  laborer  more  content  with  his  employment 
and  with  his  environment,  provided  he  is  working  un- 


128  LABOR'S  CRISIS 

der  sympathetic  management.  The  wage  is,  of  course, 
the  all-important  factor  in  the  mind  of  the  laborer,  and 
it  outranks  every  other  consideration  and  every  other 
advantage.  But  the  wage  being  equal,  the  average 
worker  will  under  fair  treatment  become  permanently 
attached  to  the  small  establishment,  although  it  lacks 
the  advantages  which  the  large  establishment  offers  by 
means  of  organized  labor  welfare  activities. 

Among  the  many  schemes  which  have  been  evolved 
with  a  view  of  cultivating  a  spirit  of  harmony  and  co- 
operation in  the  laborer,  profit  sharing,  organized  labor 
welfare,  and  industrial  democracy  are  of  special  im- 
portance, and  each  has  its  advocates,  but  not  the  sup- 
port of  organized  labor.  Harmonious  relationship 
with  labor  can,  however,  not  be  created  and  maintained 
by  prescribed  formulas  nor  by  scientific  principles. 
Whatever  method  is  applied  in  the  handling  of  labor,  it 
cannot  prove  a  permanent  success  unless  the  human 
spirit  is  the  actuating  force,  and  labor  can  realize  that  it 
is  under  a  rule  of  right  and  justice.  In  this  respect  the 
small  establishment  has  a  decided  advantage  over  the 
large,  for  in  the  closer  and  more  intimate  touch  with  its 
employees,  the  human  element  plays  an  important  part 
and  gives  the  relationship  greater  resistance  to  disturb- 
ing influences.  In  the  small  plant  the  complaints  and 
grievances  of  the  employee  come  to  the  direct  attention 
(if  the  (•ni])l()ycr  long  before  the  trouble  reaches  an 
acute  stage  or  a  breach  between  the  two  parties  is  immi- 


LABOR  IN  SMALL  PLANTS  129 

nent.  In  most  instances  the  points  of  difference  are 
adjusted  by  the  simple  poHcy  of  "  man  to  man  "  talk, 
without  resorting  to  any  outside  agency  by  which  one 
might  secure  an  advantage  over  the  other.  This  is 
particularly  true  of  establishments  in  small  industrial 
centers,  where  trade  unionism  is  not  a  strong  factor. 
If  the  issue  seriously  concerns  labor,  for  instance  wages 
or  hours  of  labor,  the  negotiations  on  behalf  of  the  em- 
ployees are  entrusted  to  a  specially  appointed  delega- 
tion, and  in  some  cases  to  the  foreman,  provided  he  is 
in  sympathy  with  the  cause,  and  in  conference  with  the 
employer  a  settlement  or  compromise  is  generally  ef- 
fected. The  greater  freedom  which  the  laborer  enjoys 
in  the  small  plant  tends  to  develop  in  him  not  only  self- 
confidence  and  a  spirit  of  initiative,  but  it  also  en- 
courages outspoken  criticism,  which  does  not  neces- 
sarily lead  to  strife  but  is  often  instrumental  in  correct- 
ing an  existing  abuse  or  shortcoming. 

The  relationship  of  capital  and  labor  is  maintained 
in  most  of  the  smaller  establishments  on  democratic 
principles,  not  in  form  but  in  spirit.  This  should  not 
be  confounded  with  "  Industrial  Democracy,"  a  newly 
evolved  principle  or  system  for  the  purpose  of  promot- 
ing harmony  with  labor,  which  proposes  to  democra- 
tize the  relationship  of  capital  and  labor  by  granting 
the  latter  the  right  of  representation  in  the  adjustment 
of  all  labor  questions.  Like  the  right  of  citizenship, 
this  right  is  exercised  not  by  direct  participation  but  by 


I30  LABOR'S  CRISIS 

representation  through  three  agencies,  termed  Con- 
gress, Senate,  and  Cabinet.  Labor  is  represented  in 
the  first,  heads  of  departments  in  the  second,  and  the 
administrative  staff  in  the  third.  At  this  point,  how- 
ever, democracy  ends,  for  the  most  important  factor  is 
the  veto  power,  which  is  vested  with  the  management, 
and  from  which  there  is  no  appeal.  It  is  evident  that 
if  "  Industrial  Democracy  "  is  to  serve  its  purpose,  it 
must  have  the  unbounded  faith  and  confidence  of  the 
laborer  and,  if  once  the  veto  power  is  arbitrarily  exer- 
cised and  comes  in  conflict  with  the  sentiment  of  labor, 
its  usefulness  is  destroyed.  Hence  the  success  of  this 
policy  depends  entirely  upon  the  benevolent  disposition 
of  the  management  and  upon  the  confidence  of  labor  in 
the  management.  Where,  however,  this  spirit  actuates 
the  relationship  of  capital  and  labor,  the  use  of  a  Con- 
gress, Senate,  and  Cabinet  for  the  adjustment  of  labor 
disputes  seems  to  be  superfluous  and  cumbersome  and 
may  in  the  end  prove  an  impediment  and  not  an  aid. 
Under  any  condition  this  system  is  as  ill  adapted  for  a 
small  concern  which  has  the  advantage  of  personal 
touch  with  labor  as  is  a  parliamentary  form  of  govern- 
ment for  a  small  town. 

It  is  nevertheless  true  that  frequent  labor  disputes 
characterize  many  small  establishments  in  large  cites, 
and  particularly  the  type  identified  with  industries  in 
which  low  cost  of  labor,  and  not  merit  of  the  product, 
is  the  operating  factor.     Establishments  of  this  type 


LABOR  IN  SMALL  PLANTS  131 

are  in  most  instances  handicapped  in  their  competition 
with  large  concerns,  as  well  as  in  their  relation  with 
labor,  by  lack  of  capital  and  lack  of  credit,  and  are  ac- 
tuated by  the  one  narrow  principle  of  strict  economy 
and  saving.  Low  cost  of  production  is  insured  by  a 
low  cost  of  labor,  and  often  also  by  a  low  standard  of 
living  of  the  employer  himself.  It  must  be  obvious 
that  in  the  keen  struggle  for  commercial  existence  and 
progress,  the  small  establishment  will  under  those  con- 
ditions not  concern  itself  with  the  welfare  of  the  em- 
ployees, except  under  stress  of  necessity  or  under  pres- 
sure of  public  sentiment.  The  law  of  self-preservation 
has,  however,  a  sharp  edge,  cutting  both  ways,  and,  if 
applied  to  the  intercourse  of  capital  and  labor,  leads 
to  the  formation  of  two  opposing  camps,  each  eager 
for  the  opportunity  of  retaliating  upon  the  other,  with 
the  result  that  both  suffer  from  frequent  strife  and 
both  are  kept  on  a  low  level  economically  and  ethically. 
Proper  handling  of  labor  demands  good  judgment 
and  tact  and  a  thorough  understanding  of  the  human 
motives  which  actuate  labor.  Strife  and  friction  with 
labor  are  often  due  to  lack  of  discretion  and  often  also 
to  the  arbitrary  and  unsympathetic  attitude  of  the  em- 
ployer. Obstinacy,  arrogance,  and  abruptness  do  not 
reconcile  differences,  and  this  is  particularly  true  in 
dealing  with  labor.  The  employer  having  as  a  rule 
the  advantage  of  a  better  education  and  more  practical 
experience,  if  not  of  a  higher  intelligence,  it  is  incum- 


132  LABOR'S  CRISIS 

bent  upon  him  to  adjust  judiciously  and  fairly  every 
issue  which  may  tend  to  disturb  his  relationship  with 
labor.  The  average  laborer  arrives  at  his  conclusions 
concerning  his  employment  not  so  much  by  the  reason- 
ing as  by  the  emotional  powers,  and  he  is  therefore 
largely  actuated  by  impulses,  as  he  is  also  strongly  sus- 
ceptible to  influences.  This  makes  it  all  the  more  ne- 
cessary that  all  grievances  of  labor  receive  careful  and 
impartial  consideration  if  the  employer  is  to  retain  the 
confidence  and  the  respect  of  his  employees.  In  many 
instances,  however,  the  scale  of  justice  and  fairness  is 
so  evenly  balanced  between  the  contending  parties  that 
even  an  impartial  arbitrator  would  be  at  a  loss  to  adjust 
the  conflicting  interests,  and  what  would  be  considered 
an  act  of  justice  to  one  party  might  prove  unjust  to 
the  other.  The  employer  has  to  display  a  strong  dis- 
criminating sense  and  he  cannot  allow  self-interest  to 
be  the  sole  determining  factor  in  dealing  with  labor 
grievances,  as  the  following  incident  clearly  demon- 
strates :  Some  years  ago  the  employees  of  the  concern 
which  will  serve  here  for  further  illustrations  de- 
manded the  observance  of  Saturday  half  holiday.  To 
do  so  necessitated  the  complete  suspension  of  work  on 
that  day  in  some  departments,  as  the  dyeing,  bleaching, 
and  scouring,  the  process  of  which  demands  uninter- 
rupted (rr.'itmcnt,  and  in  C()nse(|uence  the  existing  time 
schedule  had  to  be  adhered  lo.  (^n  closer  study  the 
employer  subsequently  came  to  the  conclusion  that  the 


LABOR  IN  SMALL  PLANTS  133 

Saturday  half  holiday  was  a  most  essential  requirement 
of  labor,  not  so  much  from  the  standpoint  of  rest  and 
needed  diversion  as  for  the  opportunity  it  offers  to  the 
laborer  and  to  his  family  to  do  the  necessary  shopping 
and  marketing  and  putting  the  home  in  order.  In  the 
face  of  these  facts  self-interest  of  the  employer,  im- 
portant as  it  was,  had  to  give  way  to  the  higher  interest 
of  labor  which  the  grievance  involved. 

In  most  of  the  industries  the  small  establishment  is 
favored  by  a  closer  and  more  harmonious  relationship 
with  labor  than  the  large  establishment,  and  this  is 
particularly  manifest  in  the  small  towns,  where  a 
strong  fellow  feeling  and  common  interest  exists  be- 
tween employer  and  employees,  the  former  frequently 
assuming  the  character  of  a  pater  familias,  who  is  the 
actuating  spirit  of  their  activities,  whether  social,  relig- 
ious, or  political.  He  shares  in  their  joys  and  in  their 
sorrows,  and  is  present  at  the  weddings  and  at  the 
funerals,  and  often  acts  also  as  the  godfather  of  the 
offspring  of  the  employees.  The  ideal  relationship  of 
capital  and  labor  finds  here  a  practical  demonstration 
in  a  close  bond  of  fellowship  based  upon  community 
of  interest  and  upon  mutual  cooperation. 

The  actual  experience  of  one  of  the  smaller  plants 
employing  about  150  workers  will  serve  to  illustrate  a 
thirty-year  relationship  with  labor  which  has  never 
been  marred  by  serious  disturbance  or  disagreement. 
The  plant  is  located  in  an  industrial  town  of  about 


134  LABOR'S  CRISIS 

30,000  inhabitants,  and  the  help,  at  one  time  composed 
of  American  and  Irish,  has  in  the  past  fifteen  years 
been  largely  recruited  from  Italian,  Hungarian,  and 
Polish  immigrants.  From  its  early  stages  until  re- 
cently, when  the  wage  became  highly  inflated,  this  con- 
cern had  observed  the  principle  of  paying  its  labor  at 
least  five  per  cent,  more  than  the  maximum  rate  pre- 
vailing in  the  vicinity  for  the  same  class  of  work,  not 
from  motives  of  philanthropy  but  as  a  matter  of  busi- 
ness expediency.  The  loss  and  annoyance  caused  by 
frequent  labor  turnover  justify  every  means  which  will 
induce  the  laborer  to  remain  at  his  job,  and  probably 
the  least  costly  and  the  most  effective  expedient  is  a 
liberal  wage.  Promotion  from  the  ranks  was  made  a 
marked  feature,  as  an  incentive  to  high  effort  and  keen 
interest  in  the  result  of  the  work.  A  boy  who  was  as- 
signed to  the  dyeing  department  as  a  helper  gradually 
rose  to  the  position  of  boss  dyer,  and  is  at  the  present 
time,  or  was  until  recently,  acting  as  a  professor  in  a 
textile  school  in  Philadelphia.  Another  boy,  begin- 
ning as  a  helper  in  the  card  room,  rose  to  the  position 
of  boss  carder,  and  is  now  filling  the  highest  post  as 
superintendent  of  the  factory.  Organized  labor  wel- 
fare was  not  attempted,  or  rather,  when  it  was  at- 
tempted on  a  small  scale,  did  not  meet  with  encourage- 
ment from  the  employees.  A  mutual  benefit  society 
was  organized  among  the  workers,  to  which  the  con- 
cern contributed  annually  the  same  amount  as  the  fees 


LABOR  IN  SMALL  PLANTS  135 

collected,  but  its  success  proved  also  its  deathblow,  for 
when  its  accumulated  assets  reached  a  rather  substan- 
tial sum,  the  members  insisted  upon  a  distribution,  and 
each  received  as  his  share  thirty-two  dollars.  The 
next  attempt,  that  of  insuring  in  a  stock  company  the 
entire  group  of  employees  against  the  contingencies 
of  illness  and  death,  likewise  proved  a  failure  for  the 
reason  that  some  of  the  employees  declined  to  assume 
the  one-half  cost  to  which  they  had  pledged  themselves. 
Later  attempts  to  insure  the  life  and  the  health  of  the 
entire  group  of  employees  proved  a  success  simply  be- 
cause the  company  assumed  the  entire  cost.  Extreme 
suspicion  by  labor  manifests  itself  even  when  the  em- 
ployees' welfare  is  the  sole  consideration  of  the  em- 
ployer, as  was  the  case  in  the  foregoing  two  instances. 
In  the  absence  of  organized  provisions  for  the  relief 
of  the  employee,  the  concern  adopted  the  policy  of  deal- 
ing with  each  case  individually  according  to  its  merits. 
Being  a  voluntary  action  on  the  part  of  the  employer, 
without  any  tax  on  labor,  and  unexpected  by  the  indi- 
vidual, it  tended  to  create  a  more  sympathetic  relation- 
ship between  employer  and  employee  than  could  prob- 
ably be  attained  by  means  of  organized  welfare  agency. 
As  an  illustration  we  will  quote  here  the  case  of  an  em- 
ployee who  after  eighteen  years  of  service  had  reached 
the  age  and  the  condition  of  inability  to  perform  longer 
the  necessary  labor.  He  had  no  savings,  his  children 
could  not  or  would  not  take  care  of  him,  and  a  public 


136  LABOR'S  CRISIS 

institution  would  have  been  his  only  resort  had  not  the 
concern  retired  him  on  half  pay.  This  primitive  pen- 
sion system  has  been  adopted  by  the  concern  as  a  per- 
manent policy,  the  cost  of  which  has  in  the  past  ten 
years  never  exceeded  fifteen  hundred  dollars  per  an- 
num, which  is  equivalent  to  an  increased  wage  of  ten 
dollars  per  annum  for  each  of  the  one  hundred  and 
fifty  laborers. 

Little  acts  like  these  receive  their  response,  if  not 
their  reward,  in  closer  cooperation,  in  increased  loyalty, 
and  in  higher  efficiency,  which  have  distinguished  this 
labor  organization  even  during  the  critical  period  of 
19 1 8.  Labor  is  essentially  human,  and  the  service  it 
renders  is  largely  influenced  by  the  treatment  it  re- 
ceives. It  is  responsive  to  evidences  of  appreciation 
and  to  words  of  approbation,  just  as  it  will  resent 
words  of  disapprobation,  particularly  if  they  spring 
from  impulse  and  not  from  a  just  cause.  Certain 
acts,  no  matter  how  generous  or  unselfish  the  motive, 
are  often  construed  by  labor  as  serving  the  interest  of 
the  employer,  or  as  something  to  which  it  is  by  right 
entitled,  as  for  instance  the  practice  of  paying  bonuses 
at  certain  periods.  The  occasion  and  the  state  of  the 
labor  market  must  be  considered  in  the  recognition  of 
service,  if  it  is  not  to  be  interpreted  by  labor  as  a  sop. 
The  concern  already  mentioned  recently  introduced  the 
practice  of  recognizing  periods  of  service  by  awarding 
thrift  stamps  ranging  in  amount  from  twenty-five  to 


LABOR  IN  SMALL  PLANTS  137 

forty  dollars  according  to  the  temi  of  service,  and  em- 
ployees who  have  completed  ten  years  of  service  re- 
ceive each  a  fifty-dollar  Liberty  Bond,  The  act  was 
particularly  appreciated  because  it  was  timed  when  the 
labor  supply  was  over  abundant  and  the  plant  was  not 
being  operated  on  full  time. 

In  some  instances  the  interest  of  the  worker  can,  by 
means  of  certain  activities  created  for  his  diversion,  be 
directed  into  channels  which,  aside  from  the  benefit  to 
employee  and  employer,  may  exert  a  decided  influence 
not  only  upon  the  v/orker's  environment  but  also  upon 
the  community,  as  will  be  observed  from  the  following 
experience : 

Induced  by  the  high  cost  of  living  in  1916,  this  same 
concern  hired  several  acres  of  land  in  the  vicinity  of  its 
factory  and,  after  having  it  cleared  and  ploughed, 
turned  it  over  to  thirty-eight  of  its  employees  for  culti- 
vation, providing  them  also  with  some  garden  imple- 
ments and  an  assortment  of  vegetable  seed.  The  em- 
ployees divided  the  land  into  thirty-eight  equal  plots, 
each  man  taking  care  of  his  own  plot  for  his  own  bene- 
fit. The  work  was  performed  when  the  day's  labor 
at  the  factory  ceased  and  on  Saturdays  and  Sundays, 
and  none  of  the  plots  showed  at  any  time  evidence  of 
neglect.  As  a  result  this  group  of  amateur  farmers 
raised,  besides  a  bountiful  crop  of  cabbages,  beans,  tur- 
nips, etc.,  a  full  winter  supply  of  potatoes  for  each  in- 
dividual member  of  the  group,  and  at  a  tirn?  when  this 


138  LABOR'S  CRISIS 

indispensable  vegetable  was  almost  prohibitive  in 
price.  The  farm  has  since  become  a  fixed  institution, 
and  the  entire  cost  of  its  maintenance  does  not  exceed 
two  hundred  and  fifty  dollars  per  annum,  which  the 
concern  assumes.  How  much  importance  is  attached 
to  it  by  some  of  the  employees  may  be  inferred  from 
the  fact  that  one  of  them,  after  being  discharged  from 
military  service  owing  to  a  disability,  applied  for  his 
old  job  at  the  factory,  but  with  the  condition  that  the 
plot  which  he  began  cultivating  in  the  spring  of  that 
year  be  restored  to  him.  It  is  not  alone  the  material 
and  recreational  benefit  which  this  primitive  farming 
venture  offers  to  the  laborer,  but  the  influence  it  exerts 
upon  his  character,  his  citizenship,  and  his  relation  to 
the  employer  that  deserves  particular  notice. 

The  foregoing  account  forms  a  typical  illustration 
of  the  smaller  establishment  in  which  the  relation  of 
employer  and  employee  is  based  upon  the  application  of 
certain  principles,  combining  practical  business  policy 
with  human  sentiment.  The  employer  recognizes  that 
this  relationship  imposes  u])on  him  certain  moral  obli- 
gations towards  his  employee,  and  he  also  recognizes 
that  labor  treated  as  a  commodity  and  not  as  a  human 
element  will  render  service  accordingly,  to  the  detri- 
ment of  both  employer  and  employee.  It  should  not 
!)c  inferred  that  the  spirit  of  unrest  which  is  animat- 
ing lalx)r  in  general  at  the  present  time,  does  not  in 


LABOR  IN  SMALL  PLANTS  139 

some  degree  also  affect  this  organization.  But  where 
employer  and  employee  are  actuated  by  mutual  consid- 
eration and  mutual  obligations,  labor  unrest  manifests 
itself  in  milder  form  and  does  not,  as  a  rule,  lead  to 
serious  or  prolonged  disturbances. 

Leaving  out  of  consideration  the  human  aspect  of 
this  policy  in  dealing  with  labor,  it  may  be  asked 
whether  from  a  business  point  of  view  the  result  justi- 
fies the  cost.  It  will  be  observed  that  in  the  case 
quoted  the  employer  makes  only  a  few  simple  but  es- 
sential provisions  in  the  interest  of  its  employees,  as 
group  insurance  and  a  crude  pension  system,  but  it  does 
not  offer  protection  against  other  contingencies  to 
which  the  laborer  is  also  peculiarly  exposed,  as  tem- 
porary unemployment  and  short  employment.  The 
group  insurance  embraces  the  following  features  : 

1.  Life  insurance  beginning  with  five  hundred  dol- 
lars after  the  first  year  and  reaching  a  maximum  of 
fifteen  hundred  dollars  on  completion  of  eleven  years 
of  service. 

2.  A  stipulated  income  in  the  event  of  an  employee 
becoming  totally  disabled  through  accident  or  disease, 
and  this  benefit  he  receives  irrespective  of  the  protec- 
tion which  the  Workmen's  Compensation  Law  offers 
him. 

3.  Gratuitous  service  of  a  visiting  nurse  in  case  of 
sickness  of  an  employee  or  a  member  of  his  family. 


140  LABOR'S  CRISIS 

The  cost  of  the  group  insurance  based  upon  a  work- 
ing force  of  one  hundred  and  fifty  employees  does  not 
exceed  twelve  hundred  dollars  per  annum. 

The  pension  system,  crude  and  limited  as  it  is,  proves 
nevertheless  a  decided  benefit  to  the  aged  dependent. 
Age  limit  or  term  of  service  do  not  enter  into  consider- 
ation, but  when  an  employee  reaches  the  stage  of  per- 
manent disability  and  can  no  longer  earn  a  wage,  he 
receives  a  weekly  allowance  according  to  his  financial 
and  physical  condition,  not  exceeding,  however,  eight 
dollars  a  week. 

The  total  cost  of  the  various  benefits  which  this  con- 
cern maintains  in  the  interest  of  its  employees  aver- 
ages about  thirty-five  hundred  dollars  per  annum, 
which  is  equivalent  to  an  increase  of  forty-three  cents 
in  the  weekly  wage  of  each  of  its  one  hundred  and  fifty 
employees.  The  mere  fact  that  with  a  per  capita  cost 
of  only  43  cents  a  week  so  much  can  be  accomplished 
in  the  interest  of  the  employee,  not  considering  the 
benefit  to  the  employer  as  a  result  of  the  harmonious 
relation,  would  seem  to  be  in  itself  a  conclusive  answer 
to  the  query  whether  the  result  of  this  policy  justifies 
the  cost. 


LABOR  AS  IT  AFFECTS  THE  WIFE  AND 
THE  HOME 

The  moral  and  intellectual  advancement  of  labor  is 
almost  entirely  dependent  upon  an  adequate  wage  and  a 
proper  home.  The  latter  must  be  attractive  not  only 
in  a  physical  sense,  by  offering  the  essential  comforts 
and  satisfying  the  bodily  needs,  but  also  in  a  spiritual 
sense,  by  serving  as  a  source  of  peace  and  contentment. 
The  wage  must  be  adequate  to  enable  the  wife  to  devote 
her  whole  time  to  the  care  of  the  home,  for  the  manage- 
ment of  a  laborer's  household,  modest  and  primitive  as 
it  is,  imposes  a  hard  task  upon  the  wife.  Whatever 
the  hours  of  labor  of  the  husband,  the  duties  of  the 
wife  know  no  end  or  time  limit  if  the  home  is  to  re- 
ceive the  proper  care  and  attention.  The  low  moral 
and  physical  condition  which  is  characteristic  of  the 
homes  of  many  v^^orkingmen  may  be  attributed  to  an 
inadequate  or  an  injudiciously  expended  wage,  owing 
to  which  the  wife  is  compelled  to  contribute  to  the  sup- 
port of  the  family  by  doing  work  outside  of  the  home. 
In  such  a  home,  squalor,  neglect,  and  often  also  actual 
misery  are  strikingly  evident,  and  neither  husband  nor 
children  receive  the  necessary  care.  The  children  are 
undernourished  owing  to  lack  of  properly  prepared 

141 


142  LABOR'S  CRISIS 

food,  just  as  they  are  also  unruly,  if  not  wayward,  be- 
cause of  lack  of  proper  control  and  supervision.  It  is 
not  an  uncommon  practice,  in  homes  where  husband 
and  wife  are  both  wage  earners,  to  entrust  the  care  of 
the  younger  children  to  an  older  one,  although  also  a 
mere  child  requiring  motherly  care.  Many  of  the  so- 
cial evils,  and  especially  juvenile  delinquency,  can  be 
clearly  traced  to  homes  which  lack  motherly  super- 
vision. The  child,  being  left  to  its  own  resources, 
chooses  any  street  diversion  which  may  appeal  to  its 
youthful  fancy,  and  long  before  it  has  reached  matur- 
ity its  character  is  molded  under  conditions  and  in 
environments  which  often  necessitate  care  in  a  correc- 
tive institution.  Nor  can  the  laborer  find  rest  and  con- 
tentment in  the  neglected  home,  and  he  seeks  cheer  and 
diversion  wherever  they  offer  themselves.  In  many  in- 
stances the  married  woman,  as  a  contributor  to  the  sup- 
port of  the  family,  will  continue  to  work  as  a  wage 
earner  until  the  last  stage  of  her  pregnancy  and  re- 
sume her  occupation,  to  the  detriment  of  herself  and 
her  infant,  long  before  she  has  recovered  her  strength. 
The  increased  earnings  due  to  the  joint  efforts  of  hus- 
band and  wife  may  relieve  the  family  from  actual 
want,  or  help  to  provide  additional  comforts,  but  the 
material  im])rovement  is  obtained  at  the  cost  of  the 
moral  welfare  of  the  family  and  at  the  sacrifice  of  the 
contentment  and  happiness  of  the  home.  The  evil 
may  not  directly  affect  the  interest  of  labor,  but  it  is  of 


THE  WIFE  AND  THE  HOME  143 

vital  consequence  to  society,  inasmuch  as  it  undermines 
the  functions  and  the  moral  influence  of  the  home  and 
endangers  the  welfare  of  the  child. 

The  married  woman  as  a  wage-earning  factor  of  the 
family  presents  also  another  phase  which  has  a  decided 
bearing  upon  the  labor,  the  duties,  and  the  character  of 
the  husband.  The  picture  illustrating  the  status  of 
the  woman  in  some  European  countries,  which  depicts 
the  husband  as  contentedly  smoking  his  pipe  in  sweet 
idleness  while  the  wife  is  performing  heavy  labor  in 
the  nearby  field,  is  not  at  all  overdrawn.  It  correctly 
portrays  a  social  condition  which  prevails  in  many 
lands,  and  it  also  conveys  the  vitiating  effect  upon  the 
man  when  woman  assumes  the  labor  and  the  duties 
which  by  generally  recognized  custom,  if  not  by  the 
laws  of  nature,  devolve  upon  the  husband.  The  male 
bird  displays  finer  instincts,  for  it  braves  all  the  ele- 
ments to  provide  food  for  its  brood  while  the  mate 
is  guarding  them  in  the  nest  from  danger. 

Just  as  child  labor  has  been  recognized  as  a  social 
evil  and  its  elimination  has  been  accomplished  in  the 
greater  part  of  the  United  States,  so  the  labor  of  the 
woman  wage  earner  who  has  the  care  of  the  home 
and  her  young  children  could  be  judiciously  restricted 
and  should  be  sanctioned  only  under  special  circum- 
stances. The  husband  is  the  legal  provider  for  the 
family,  except  where  perverted  moral  laws  prevail ; 
and,  although  the  standard  wage  takes  this  fact  into 


144  LABOR'S  CRISIS 

account,  it  is  nevertheless  in  many  instances  inadequate, 
particularly  if  the  family  is  large  or  contingencies 
arise  which  impose  an  additional  tax  upon  the  man's 
earnings.  In  view  of  the  prevailing  high  wage  the 
time  would  seem  opportune  for  restricting  the  labor 
of  married  women  to  the  home,  and  for  insisting  that 
the  husband  be  the  sole  supporter  of  the  family,  except 
where  the  wife  is  by  necessity  compelled  to  take  his 
place.  If  the  husband  is  compelled  to  provide  for  the 
family  without  his  wife's  aid  he  is  likely  to  avoid  idle- 
ness and  to  become  a  more  persistent  and  efficient 
worker  in  order  to  increase  his  earnings.  The  elim- 
ination of  child  labor,  which  was  formerly  an  im- 
portant factor  in  the  combined  earnings  of  the  family, 
did  not  cause  serious  economic  disturbance  to  those 
directly  concerned  in  the  change,  and  the  reform  here 
advocated  is  not  likely  to  prove  of  greater  conse- 
quence, so  far  as  the  economic  status  of  the  family  is 
concerned.  Labor  has  demonstrated  its  power  of  cor- 
recting most  of  the  evils  which  interfere  with  its  wel- 
fare and  its  interests,  but  it  has  neglected  to  use  its 
influence  and  its  resources  in  the  direction  which  con- 
cerns laljor  and  society  most  vitally,  namely,  the  ele- 
vation (A  the  home  of  the  workingman. 


OBJECTIONS  TO  A  LEGISLATED 
MINIMUM  WAGE 

The  wage  cannot  be  considered  apart  from  its  pur- 
chasing power,  but,  strange  as  it  may  seem,  this  fact 
was  until  very  recently  almost  entirely  ignored  by  the 
wage  earner,  and  in  some  instances  by  our  legislators 
and  social  reformers.  Whether  the  wage  be  high  or 
low,  its  actual  value  is  determined  by  the  cost  of  liv- 
ing, and  under  certain  conditions  the  workingman 
does  not  fare  so  well  with  a  high  wage  as  with  a  low 
wage.  It  is  only  when  the  inflated  cost  of  living 
more  than  absorbs  his  earnings  that  the  workingman 
is  made  to  realize  that  the  value  of  the  wage  is  not 
measured  by  the  amount  of  the  remuneration  but  by 
the  cost  of  his  necessities.  While  the  cost  of  living 
and  the  wage  act  in  close  sympathy  and  follow  each 
other's  movements,  the  former  is  more  sensitive  to  the 
factors  which  cause  the  rise  and  decline  in  the  cost  of 
commodities  and  hence  is  subject  to  more  frequent 
fluctuations.  It  is  on  this  account  that  a  minimum 
wage  law,  which  has  already  been  enacted  in  different 
forms  in  fourteen  states,  will  require  frequent  revision 
and  readjustment  to  meet  the  fluctuating  cost  of  living 
as  well  as  the  changing  economic  conditions,  or  it  must 

145 


146  LABOR'S  CRISIS 

remain  a  dead  letter.  Owing  to  local  differences  in  the 
cost  of  living,  the  law  will  also  have  to  provide  a  dif- 
ferential rate  for  large  cities  and  smaller  towns,  if  not 
for  different  sections  of  the  same  city.  Some  of  the 
state  laws  relating  to  the  minimum  wage  have  taken 
this  fact  into  account  by  providing  for  a  permanent 
board  with  power  to  regulate  the  minimum  wage  ac- 
cording to  the  fluctuating  cost  of  living.  The  task  of 
such  a  board  will,  however,  be  put  to  a  test  not  when 
general  inflation  favors  and  facilitates  raising  the  mini- 
mum wage  but  when  general  contraction  will  demand 
scaling  the  wage  to  lower  levels. 

Seemingly  the  law  becomes  inoperative  in  times  of 
industrial  and  commercial  activity,  when  the  keen 
competitive  demand  for  labor  creates  automatically  a 
high  wage  scale  and  the  employer  is  under  the  neces- 
sity of  employing  labor  regardless  of  experience,  skill, 
or  efficiency.  On  the  other  hand  in  normal  times, 
when  labor  is  abundant,  the  efficient  worker  is  likely 
to  have  the  preference  in  employment,  for  he  is  more 
profitable  to  the  employer  at  a  maximum  wage  than 
the  inefficient  worker  at  a  legislated  minimum  wage. 
In  times  of  economic  reaction  the  minimum  wage 
earner  will  be  placed  at  a  decided  disadvantage  in  com- 
petition w  itii  crficicncy  and  experience,  and  this  handi- 
c.'ij)  i-annof  he  rfni()\c(l  1)\-  k\L;islati\e  act.  Laws  may 
be  enacted  to  prevent  a  decline  of  the  wage  below  a 
legally  fixed  rate,  but  they  cannot  compel  employment 


LEGISLATED  MINIMUM  WAGE        147 

nor  prevent  discrimination,  and  the  worker  himself 
will  in  the  end  determine  which  of  the  two  evils  is  the 
less,  temporary  idleness  or  an  inadequate  wage. 

The  point  may  also  be  raised  that  a  minimum  wage 
rate  will  discourage  the  employment  of  learners  or  ap- 
prentices in  certain  trades,  for  a  large  number  of  those 
who  will  be  affected  by  the  enforcement  of  the  law  are 
young  and  inexperienced  learners  on  the  threshold  of 
a  trade,  who  with  increased  experience  eventually  be- 
come better  wage  earners.  If  the  employment  of 
learners  is,  however,  made  unprofitable  to  the  employer 
by  reason  of  a  drastic  minimum  wage  law,  the  in- 
centive for  their  employment  and  for  their  training  is 
likely  to  be  removed,  particularly  in  times  when  a 
normal  supply  of  experienced  labor  is  obtainable. 

Aside  from  the  reasons  advanced  here  against  a 
legislated  wage,  the  fact  cannot  be  overlooked  that 
labor  has  demonstrated  in  recent  years  that  by  col- 
lective action  it  can  successfully  cope  with  any  prob- 
lem which  concerns  it,  whether  it  be  the  wage,  the 
working  hours,  or  any  labor  regulation.  Through  the 
efforts  of  the  labor  unions  a  scientific  wage  scale  is 
operative  in  many  of  the  trades,  by  which  every 
worker,  from  hepler  to  foreman,  is  insured  a  fair 
wage  according  to  rank  and  character  of  service. 
This  arrangement  is  all  the  more  effective  because  it  is 
based  upon  a  mutual  wage  agreement  of  the  tAVo 
parties  directly  concerned  in  it,  the  employer  and  the 


148  LABOR'S  CRISIS 

employee,  and  it  is  not  open  to  the  complex  and  con- 
flicting legal  interpretations  of  a  rigid  legislative  wage 
enactment.  It  is  not  open  to  evasion  or  to  serious 
contention,  and  both  parties  adhere  strictly  to  this 
minimum  wage  principle  because  it  adjusts  itself  to 
all  economic  fluctuations  and  forms  a  scientific  base 
for  the  wage  scale.  Trade  agreements  virtually  con- 
stitute trade  codes  regulating  the  relation  of  capital 
and  labor,  by  means  of  which  most  of  the  questions 
at  issue  can  be  and  in  many  instances  are  amicably  ad- 
justed. They  also  insure  greater  stability  to  labor  and 
to  capital  by  lessening  the  causes  for  serious  labor 
and  trade  disturbances.  Although  the  unions  exer- 
cise jurisdiction  over  only  a  minor  part  of  the  labor 
element  of  the  United  States,  their  action  affects  sym- 
pathetically the  entire  field  of  labor,  and  their  rules 
and  rulings  not  only  have  the  force  of  law  so  far  as 
the  individual  members  of  the  union  are  concerned  but 
also  strongly  influence  the  attitude  of  unorganized 
labor  in  the  remotest  parts  of  the  country.  Just  as 
under  pressure  of  collective  action  the  standard  ten- 
hour  day  has  been  gradually  reduced  to  eight  hours, 
with  the  prospect  of  still  further  time  curtailment,  so 
can  the  same  forces  be  instrumental  in  establishing 
a  generally  recognized  minimum  wage,  as  has  been 
demonstrated  in  many  of  the  trades.  A  minimum 
wage  enforced  by  collective  action  of  labor  will  have 
the  advantage  of  following  closely  the  trend  of  fluctu- 


LEGISLATED  MINIMUM  WAGE        149 

ations,  and  it  will  be  less  exposed  to  the  evasions  and 
misinterpretations  which  often  characterize  legisla- 
tive enactments. 

The  minimum  wage  law  which  is  being  strongly  ad- 
vocated by  leading  social  reformers,  having  been 
adopted  in  fourteen  states  and  in  different  forms,  can- 
not be  said  to  have  had  a  fair  test  demonstrating  its 
practical  value  under  all  economic  conditions.  Its 
operation  has  not  covered  any  period  of  marked  eco- 
nomic depression  or  of  a  declining  wage,  and  only  un- 
der those  conditions  can  a  legislated  minimum  wage 
have  an  opportunity  of  justifying  its  enactment.  It  is 
also  obvious  that  the  law  remains  dormant  and  is  of 
little  practical  value  when  labor  scarcity  enables  even 
the  inefficient  and  the  inexperienced  to  earn  a  wage 
far  above  the  minimum  scale.  The  present  outstand- 
ing problem  the  world  over  is  not  a  low  wage  earned 
by  excessive  labor  but  an  inflated  wage  earned  by 
greatly  diminished  labor,  and  this  applies  to  the  mini- 
mum as  well  as  to  the  maximum  wage. 

It  may  be  suggested  that  the  minimum  wage  law 
was  enacted  to  protect  the  laborer  in  times  of  economic 
reaction  or  when  under  pressure  of  want  he  is  likely 
to  submit  to  a  wage  which  is  inadequate  for  his  sup- 
port. But  even  in  view  of  such  emergency  it  will  have 
to  be  assumed  that  the  present  awakening  and  power 
of  labor  is  merely  a  passing  manifestation  or  a  deliri- 
ous outbreak,  and  that  labor  has  not  shaken  off  the 


ISO  LABOR'S  CRISIS 

impotency  and  lethargy  which  characterized  it  in  the 
nineteenth  century.  It  will  also  have  to  be  assumed 
that  labor  is  still  the  ward  of  the  state,  requiring  spe- 
cial care  to  protect  it  from  the  unjust  and  oppressive 
rule  of  capital.  This,  however,  would  be  contrary  to 
the  generally  accepted  conclusion  that  the  power,  in- 
fluence and  prestige  which  labor  has  gained  cannot  be 
destroyed  and  will  remain  a  permanent  force  in  the 
social  and  economic  organization.  Labor  can  no  more 
relapse  to  its  old  condition  than  society  can  to  feudal- 
ism. The  new  spirit  of  labor  springs  from  a  strong 
consciousness  of  its  might  and  of  its  rights,  and  it  will 
not  suffer  the  curtailment  of  any  of  the  vital  advan- 
tages which  it  has  gained,  even  though  the  support  of 
the  state  is  withheld.  This  does  not  signify  that  con- 
traction of  the  wage  from  its  present  inflation  will  not 
eventually  occur,  but  it  will  be  accompanied  by  a  re- 
duced cost  of  living,  and  the  powers  of  labor  will  prove 
equal  to  meet  this  contingency  and  prevent  the  wage 
from  reaching  a  level  which  would  tend  to  lower  the 
laborer's  standard  of  living-. 


HOUSING  OF  THE  LABORER 

Whether  it  be  a  mansion  or  a  hovel,  the  home  is 
the  mirror  in  which  are  reflected  the  virtues  and  the 
faults,  the  tastes  and  the  habits  of  its  inmates.  High 
ideals  and  depravity,  aspirations  and  indifference,  mod- 
esty and  pretension,  thrift  and  wastefulness,  orderli- 
ness and  slovenliness,  all  leave  their  imprint  on  the 
home  and  determine  for  good  or  for  evil  its  charac- 
ter and  its  influence  upon  the  immediate  environment. 
Moreover  the  home  may  be  considered  a  fairly  ac- 
curate gauge  of  the  economic  condition  of  the  family, 
whether  enjoying  abundance  or  suffering  from  de- 
privation, whether  it  has  the  advantage  of  wealth  or 
is  struggling  against  the  odds  of  poverty.  A  senti- 
ment of  sanctity  and  inviolability  has  at  all  times  been 
attached  to  the  home,  and  this  sentiment  has  been  recog- 
nized and  fostered  by  every  religion  and  by  the  laws 
and  customs  of  every  land,  no  matter  how  low  the  state 
of  civilization. 

The  instinct  of  self-preservation  suggests  to  the  ani- 
mal the  choice  of  an  abode  that  will  safeguard  it  and 
its  young  from  the  intrusion  of  lurking  dangers.  The 
bird  builds  its  nest  where  it  is  least  exposed  to  the  ele- 
ments, and  it  makes  every  provision  for  the  safety  of 

iSi 


152  LABOR'S  CRISIS 

its  brood.  Human  beings,  however,  cannot  in  all  cases 
exercise  that  freedom  in  the  choice  of  a  safe  domicile. 
Paradoxical  as  it  may  seem,  a  higher  civilization  tends 
to  lower  in  many  essentials  the  standard  and  the  con- 
dition of  human  habitation,  for  with  the  expansion 
of  commerce  and  industry,  and  with  the  consequent 
growth  of  cities  and  towns,  urban  populations  become 
more  and  more  congested  and  housing  more  and  more 
contracted,  at  the  expense  of  the  three  fundamental  re- 
quirements of  sanitary  dwellings  and  decent  homes : 
space,  air  and  light. 

The  problem  of  human  habitation  may  be  said  to 
increase  with  the  distance  from  the  equator,  as  in  the 
northerly  latitudes  climatic  conditions  demand  not  only 
more  substantial  and  elaborate  construction  than  in  the 
warmer  zones,  but  they  also  compel  closer  family  con- 
tact and  closer  social  association  within  doors,  and  as 
a  consequence  more  room  space  and  better  housing  fa- 
cilities are  required.  Surrounding  conditions  greatly 
influence  the  character  and  type  of  habitation.  For 
instance  in  California,  where  outdoor  life  the  year 
round  is  characteristic  of  the  people,  the  simple  bunga- 
low is  popular  even  among  the  well-to-do.  In  the 
arid  regions  of  the  Lhiitcd  States  the  houses  have  the 
form  of  a  drv-goods  box,  the  roofs  l)eing  flat,  for  roof 
drainage  is  unnecessary. 

Just  as  tlic  clomiciliarv  problem  increases  with  the 
distance   from   the  c(|uator,  so  also  it  becomes  more 


HOUSING  OF  THE  LABORER         153 

complex  and  more  difficult  of  solution  with  the  density 
of  population,  with  the  extent  and  character  of  the 
industries,  and  above  all  else  with  a  low  economic  con- 
dition of  the  people.  The  economic  condition  enters 
very  deeply  into  this  problem  and  to  a  large  extent 
establishes  the  standard  of  dwellings  of  different  classes 
of  people.  Wealth  permits  a  very  wide  latitude  in  the 
choice  of  a  dwelling;  it  can  be  made  to  conform  not 
only  to  every  requirement  of  sanitation  and  comfort, 
but,  like  that  of  the  migratory  bird,  the  abode  may  be 
changed  from  the  extreme  cold  of  the  north  to  the 
warmth  of  the  south,  or  zrice  versa,  to  suit  the  changes 
of  the  season  or  the  whim  of  the  individual.  The  evil 
of  neglected  and  unfit  housing  begins  to  make  itself 
manifest  with  the  people  who  are  constantly  struggling 
not  so  much  with  poverty  as  against  it,  and  as  the 
scale  of  individual  earnings  declines  and  the  line  of 
extreme  poverty  is  reached,  the  wretchedness  and 
misery  of  the  housing  is  laid  bare  before  us. 

The  housing  of  the  poor  is  determined  by  two  fac- 
tors; first,  the  amount  of  the  meager  wage  that  can  be 
spared  for  rent;  and,  second,  the  opportunity  of  finding 
work  in  the  immediate  neighborhood  with  the  least 
loss  of  time  and  money  in  going  to  and  fro.  Under 
the  circumstances  the  laborer  is  compelled  to  accept 
such  housing  as  may  be  available  and  he  cannot  ex- 
ercise the  necessary  judgment  or  discretion,  even  in 
relation  to  the  vital  requirements  of  sanitation  and 


154  LABOR'S  CRISIS 

home  comfort.  Unless  public  authorities  assert  them- 
selves in  his  behalf  he  is  left  helpless  and  must  submit 
to  conditions  that  are  a  menace  not  only  to  the  physical 
and  moral  welfare  of  himself  and  his  family  but  to 
the  state  as  well. 

The  housing  problem  is  not  confined  to  the  dense 
centers  of  population.  It  seriously  affects  also  the 
smaller  towns  in  the  United  States,  where  space,  air, 
and  light  are  not  supposed  to  command  a  premium. 
The  economic  forces  operate  here  with  the  same  power 
as  in  large  cities,  but  the  factor  which  is  largely  re- 
sponsible for  the  low  housing  standard  in  the  smaller 
towns  is  the  neglect  and  in  most  instances  the  com- 
plete absence  of  official  supervision  over  planning,  con- 
struction, and  maintenance  of  homes.  Smaller  towns 
cannot  as  a  rule  maintain  a  well-organized  scientific 
health  or  building  department,  and  only  in  case  of  a 
serious  local  epidemic  is  any  effort  made  to  enforce 
even  the  simplest  rules  and  regulations  of  sanitation. 
As  a  result  workingmen's  houses  in  many  of  the  in- 
dustrial tmvns  are  mere  shacks,  neglected  and  dilapi- 
dated, without  even  primitive  home  facilities,  and  lack- 
ing proper  drainage  and  the  necessary  supply  of  pure 
water.  The  tenant  becomes  as  unconcerned  in  respect 
to  the  condition  of  his  home  as  is  the  landlord  in  re- 
gard to  tlic  condition  of  his  ])ro|)crty.  and  the  ex'il  is 
allowed  to  continue  without  official  interference. 

Fortunately  a  new  spirit  is  making  itself  strongly 


HOUSING  OF  THE  LABORER         155 

manifest,  which  must  finally  result  in  a  widespread  bet- 
terment of  the  housing  of  workingmen  in  industrial 
towns.  This  is  not  being  secured  by  legislation  or  by 
an  awakened  civic  interest  nor  by  labor  organization 
but  by  employers  themselves,  who  have  begun  to  recog- 
nize that  a  high  standard  of  labor  efficiency  can  be  de- 
veloped and  maintained  only  through  the  permanence 
and  stability  of  labor.  Whenever  labor  displays  a 
nomadic  tendency,  shifting  discontentedly  from  one 
place  to  another  and  from  one  occupation  to  another, 
efficiency  cannot  be  maintained,  and  eventually  the 
growth  and  success  of  the  affected  industry  will  be- 
come seriously  impaired.  Some  of  our  noted  indus- 
trial concerns  have  recognized  the  wisdom  and  sound 
business  policy  of  establishing  a  closer  bond  between 
employer  and  employees,  and  the  welfare  of  the  em- 
ployees, particularly  in  sanitary  and  domiciliary  re- 
spects, is  receiving  special  study  and  attention.  This 
does  not,  however,  lessen  the  evil  of  the  disgraceful 
dwelling  conditions  which  are  still  tolerated  in  so  many 
smaller  towns ;  but  it  is  safe  to  assume  that  the  better 
spirit  will  become  more  widespread,  particularly  in 
view  of  the  fact  that  the  refonn  is  not  being  stimu- 
lated by  philanthropic  efforts  but  largely  by  sound 
business  policy. 

As  already  emphasized,  housing  of  the  poor  in  the 
large  congested  cities,  and  particularly  in  New  York 
City  with  its  peculiar  topographical  situation,  presents 


156  LABOR'S  CRISIS 

a  difficult  and  complicated  problem,  and  its  solution  is 
still  very  remote,  with  slight  hope  that  all  the  evils 
associated  with  it  can  ever  be  entirely  removed.  Un- 
like some  of  the  smaller  industrial  cities  where  in  cer- 
tain cases  the  greater  part  of  the  population  is  em- 
ployed by  a  single  industrial  concern,  the  workingmen 
in  New  York  are  distributed  in  numberless  diversified 
industries,  each  industry  split  up  into  small  units  or 
establishments  employing  a  comparatively  small  work- 
ing force.  Unlike  his  fellows  in  the  smaller  industrial 
cities  and  towns,  where  in  many  instances  the  indus- 
trial concern  owns  the  houses  of  its  employees,  the 
New  York  employer  cannot  for  obviows  reasons  con- 
cern himself  directly  with  the  living  conditions  of  his 
employees  and  the  evils  rarely  come  under  his  personal 
observation.  It  must,  therefore,  be  evident  that  the 
forces  which  favor  the  betterment  of  living  conditions 
of  the  working  class  in  smaller  cities  cannot  be  ex- 
pected to  operate  in  New  York  City,  and  any  reform  in 
this  direction  must  come  from  recognized  authorities 
and  by  a  slow  process  of  education.  The  workingman 
must  of  necessity  make  his  home  in  the  multiple  tene- 
ment, whether  his  wages  average  three,  four,  or  five 
dollars  a  day.  His  only  choice  is  between  what  is 
known  as  the  new-law  tenement  and  the  old  type  tene- 
ment erected  before  1901,  when  the  present  New  York 
building  law  was  enacted.  This  choice  is  again  re- 
stricted by  the  ever-present  economic  factor,   for  the 


HOUSING  OF  THE  LABORER         157 

standard  of  the  housing  condition  is  largely,  if  not 
altogether,  determined  by  the  rental.  This  is  the  cru- 
cial point  of  the  housing  problem  of  the  poor,  for  liv- 
ing conditions  have  to  conform  to  earnings  and  not 
vice  versa,  and  if  improved  dwelling  conditions  are 
based  upon  higher  rentals,  the  straining  point  is 
reached  where  the  purpose  of  betterment  defeats  itself. 
The  state  can  legislate  and  regulate  the  housing  con- 
dition of  the  people,  it  can  enact  and  enforce  laws 
for  the  safety,  health,  and  even  for  the  comfort  and 
convenience  of  the  home,  but  it  cannot  change  unre- 
lenting economic  laws  and  compel  capital  to  provide 
improved  or  approved  housing  without  adequate  re- 
turn on  the  investment.  That  the  wage  earner  in  New 
York  is  still  attached  to  the  old  tenement,  devoid 
though  it  be  of  many  fundamental  requirements  of  a 
proper  home,  official  records  conclusively  prove.  Ac- 
cording to  the  Ninth  Report  of  the  Tenement  House 
Department  of  the  City  of  Nezu  York,  the  Borough  of 
Manhattan  had,  December  31,  191 7,  40,822  tenement 
houses  of  all  types,  including  high-priced  apartment 
houses,  with  a  total  of  541,851  apartments.  Of  this 
number  35,288  tenements  containing  389,303  apart- 
ments, were  constructed  before  the  enactment  of  the 
present  Tenement  House  Laws,  and  are  classified  as 
old-law  tenements.  The  minimum  rental  in  the  new- 
law  tenement  for  an  apartment  of  three  rooms  with 
bathroom  and  hot  water  supply  is  $15  per  month,  the 


158  LABOR'S  CRISIS 

rent  increasing  in  the  more  desirable  locations  nearest 
to  the  lines  of  rapid  transit.  The  minimum  rental  for 
a  five-room  apartment  in  the  old-law  tenement  is  $14 
per  month  without  bath  and  hot  water  supply,  or  ap- 
proximately 60  per  cent,  less  than  the  same  number 
of  rooms  in  the  new-law  tenement.  Since  19 18  the 
scarcity  of  housing  and  the  rapid  advance  in  rental  in 
New  York  have  become  marked,  thus  intensifying  the 
problem  of  housing  and  increasing  the  importance  of 
the  old  tenement  as  a  factor. 

It  is  therefore  evident  that  if  a  poor  man  desires  to 
avail  himself  of  the  advantages  of  the  new-law  tene- 
ment he  must  either  sacrifice  rooming  space  and  crowd 
his  family  into  fewer  rooms  or  pay  a  greatly  in- 
creased rental.  The  first  choice  must  result  in  room 
crowding  or  congestion,  and  the  second  is  a  heavy  tax 
upon  his  meager  earnings,  which  in  most  cases  he  is 
unable  to  bear.  As  a  natural  consequence  the  old-law 
tenement  continues  to  be  the  predominating  dwelling 
place  of  the  greater  part  of  the  population  of  New 
York  City,  and  almost  exclusively  of  the  poorer  class 
to  whose  means  and  needs  it  is  evidently  best  adapted. 

The  flagrant  evils  of  the  old  tenement  have  been 
transmitted  to  the  present  generation  by  the  laxity  and 
incompetence  of  the  official  authorities  of  fornier 
years,  and  tliough  in  recent  years  some  of  the  evils 
have  been  corrected  by  the  newly  constituted  Tene- 
ment  llousc  Commission,  manv  more,  as  for  instance 


HOUSING  OF  THE  LABORER         159 

the  totally  inadequate  airshafts,  remain  and  will  re- 
main unless  the  buildings  are  remodeled  and  recon- 
structed, virtually  bringing  them  within  the  classifica- 
tion and  rental  of  the  new-law  tenement. 

The  old-law  tenement  as  it  now  exists  lacks  not 
only  primitive  requirements  for  the  maintenance  of  a 
decent  standard  of  living,  but  it  also  discourages  an 
economical  and  orderly  management  of  the  home. 
Facilities  for  storing  and  preserving  food  supplies  are 
not  provided.  The  wash  tub  in  the  kitchen  serves, 
when  the  need  becomes  very  urgent,  as  a  bath  tub. 
Nails  and  hooks  attached  to  the  wall  under  a  rough 
shelf  serve  in  most  cases  the  purpose  of  a  wardrobe. 
The  walls  are  either  papered  or  painted  in  a  color 
scheme  which  does  not  tend  to  the  cleanliness  of  the 
home.  Soft  wood  floors  retaining  the  moisture  add 
to  the  hardship  of  the  already  overworked  house- 
keeper. Even  the  furniture  is  ill  adapted  for  the 
dwelling  of  the  poor,  being  either  crude  and  cumber- 
some or  too  pretentious  for  the  surroundings.  It  is 
all  the  more  remarkable  that  under  almost  insurmount- 
able difficulties  many  of  these  homes  show  every  evi- 
dence of  cleanliness  and  order,  of  decency  and  re- 
spectability, but  unfortunately  a  greater  number  of 
families  who  do  not  or  cannot  cultivate  those  virtues 
become  apathetic  and  indifferent  to  their  surroundings. 

That  the  existing  conditions  in  these  tenements  can 
in  many  important  respects  be  improved  without  im- 


i6o  LABOR'S  CRISIS 

posing  a  serious  tax  upon  either  landlord  or  tenant, 
will  be  shown  by  the  following  illustration,  taking  one 
or  two  adjoining  old  tenements  for  a  practical  demon- 
stration. A  shower  bath  can,  in  the  absence  of  bathing 
facilities,  be  installed  in  the  kitchen  in  a  partitioned 
space  about  two  feet  square  and  can  be  connected  with 
a  central  hot  water  supply  plant  placed  in  the  cellar. 
Adequate  shelf  and  closet  space  for  keeping  a  limited 
quantity  of  food  and  fuel  can  be  provided  in  the 
kitchen.  The  upper  sash  of  the  window  frames  can 
be  glazed  with  prismic  glass,  thus  allowing  more  day- 
light to  relieve  the  gloom  of  the  inner  rooms.  Small 
and  inexpensive  wardrobes  will  do  away  with  the  un- 
sanitary practice  of  exposing  the  clothes  in  the  living 
room  and  in  the  bedroom.  Floor  can  be  laid  in  nar- 
row hardwood  strips,  lessening  the  work  of  scrubbing 
and  cleaning.  Wall  paper  can  be  altogether  elim- 
inated, the  walls  being  painted  in  a  light  color  scheme, 
with  a  view  not  only  of  adding  light  and  cheer  but 
also  of  making  it  possible  to  have  them  washed.  The 
yard  fence  between  the  two  adjoining  houses  can  be 
removed  to  provide  a  safe  playground  for  the  children 
of  the  two  tenements. 

It  will  be  observed  that  structural  alterations  are 
avoided  in  this  scheme  and  only  certain  features  are 
recommended  with  a  view  to  correcting  some  of  the 
shorlcoinings  of  the  old  tenement  houses.  The  ques- 
tion  nrittu-ally  arises  whether   the  landlord   can   offer 


HOUSING  OF  THE  LABORER         i6i 

such  improvements  without  materially  increasing  the 
rental.  Dwelling  reform  cannot  become  widespread 
and  achieve  its  aim  if  it  fails  to  take  into  consideration 
the  interest  of  the  landlord,  and  it  is  necessary  to 
consider  also  this  phase  of  the  problem  to  arrive  at  an 
intelligent  answer.  The  statement  may  safely  be  made 
that  until  very  recently  the  possession  of  real  estate 
proved  to  many  of  the  owners  a  liability  and  not  an 
asset,  and  this  was  particularly  true  of  the  low  type 
tenement.  Drastic  but  justifiable  requirements  of  the 
Tenement  House  Department,  higher  rate  of  taxation, 
greatly  increased  cost  of  maintenance,  higher  rate  of 
interest  on  mortgages  —  all  contributed  and  still  con- 
tribute toward  creating  this  condition.  But  most  of 
all  the  frequent  shifting  of  tenants  and  the  great  cost 
of  repairs  and  renovations,  due  in  a  measure  to  the 
carelessness  if  not  to  the  destructive  disposition  of 
some  of  the  occupants,  constitute  a  serious  drain  upon 
the  rental  income,  as  they  are  the  main  causes  of  the 
deterioration  and  depreciation  of  property. 

The  poor  tenant,  and  he  must  not  be  confounded 
with  the  slum  dweller  who  represents  a  special  type  of 
the  lowest  class,  is  not  at  all  indifferent  to  his  dwelling 
conditions.  On  the  contrary,  he  is  always  demanding 
improvements  which  he  may  have  observed  in  the  home 
of  a  better  situated  neighbor,  where  it  be  a  new  type 
of  range  or  a  porcelain  sink.  The  roving  disposition 
and  the  spirit  of  vandalism  which  he  sometimes  dis- 


i62  LABOR'S  CRISIS 

plays  are  mainly  due  to  discontent  with  his  surround- 
ings. Under  favorable  dwelling  condition  he  becomes 
firmly  attached  to  his  home,  cooperates  with  the  land- 
lord to  maintain  the  higher  standard  of  the  tenement, 
and  even  considers  it  a  special  privilege  to  dwell  under 
its  roof. 

The  complex  problem  which  the  intolerable  housing 
conditions  of  the  laborer  in  New  York  and  other  large 
cities  presents,  is  not  to  be  solved  by  the  expedients 
recommended  here,  but  they  will  help  to  alleviate  it 
by  removing  at  least  some  of  the  blemishes  which 
characterize  the  domiciles  of  the  greater  part  of  the 
working  population  of  New  York  City.  The  home 
determines  and  reflects  the  standard  of  living,  and 
where  it  lacks  every  physical  comfort  and  imposes 
hardship  upon  the  dweller,  it  breeds  resentment  against 
social  order  and  forms  one  of  the  most  potent  causes 
of  labor  discontent. 


INFLATION  AND  HIGH  TAXES  —  THEIR 
EFFECT 

Economic  forces,  like  the  laws  of  nature,  operate 
relentlessly  and  despotically,  heedless  of  human  laws 
and  ethical  principles.  They  shape  and  control  the 
fate  of  nations  and  individuals,  creating  and  destroy- 
ing, populating  and  depopulating,  uplifting  and  sub- 
merging, establishing  close  kinship  and  producing  in- 
equalities and  differences  in  the  human  family.  They 
give  to  human  action  impelling  and  driving  force, 
stimulating  energy  and  ambition,  inciting  envy  and 
jealousy,  causing  feuds  and  wars,  but  also  establishing 
peace  and  stability.  All  social  upheavals  and  con- 
vulsions spring  from  the  pressure  of  the  economic 
forces,  or  are  strongly  influenced  by  them.  The  pres- 
ent world  unrest  has  purely  an  economic  aspect  and 
tendency,  and  is  the  result  of  a  deranged  and  an  un- 
balanced economic  condition  distinguished  by  vast 
wealth  and  extreme  poverty.  A  new  social  order  will 
eventually  evolve  from  the  unrest,  and  the  closer  it  is 
adjusted  to  a  state  of  economic  and  social  balance 
by  eliminating  extreme  contrasts  of  rich  and  poor,  the 
greater  will  be  its  stability  and  the  more  enduring  the 
peace  of  the  human  family. 

163 


i64  LABOR'S  CRISIS 

The  coming  social  order  is  still  veiled  in  mystery, 
but  a  process  of  social  transformation  and  social  level- 
ing, as  well  as  of  economic  readjustment,  is  already 
unmistakably  manifest,  not  only  in  the  increasing 
power  and  control  of  labor  over  the  productive  forces, 
but  also  in  the  impaired  power  and  control  of  capital 
over  labor  and  over  the  political  forces.  By  lessening 
the  supply  of  labor  and  intensifying  the  demand  for  it, 
labor  is  enforcing  a  policy  by  which  more  laborers  are 
maintained  or  more  time  is  consumed  for  a  given  pro- 
duction than  heretofore.  By  reducing  the  perform- 
ance of  labor  and  of  productiveness,  society  is  being 
forced  to  restrict  and  modify  its  wants,  habits  and  in- 
dulgences, thus  lowering  as  well  as  leveling  the  stand- 
ard of  living.  The  enormous  depletion  of  the  supply 
of  labor,  due  to  social  progress,  to  labor  regulations, 
and  to  labor's  elevation  has  been  statistically  demon- 
strated in  the  previous  chapters.^  It  is  also  generally 
recognized  by  those  who  come  in  close  touch  with  the 
operation  of  labor  that  when  the  material  improve- 
ment of  the  laborer,  and  particularly  of  the  common 
laborer,  reaches  the  point  where  his  moderate  wants 
can  be  supplied  with  lessened  effort,  his  exertion  and 
close  aj)plciation  also  weaken.  The  laborer  merely 
di.splays  in  this  respect  the  same  characteristic  as  the 
average  human   being.     All  these   factors  contribute, 

'  Depletion    and   deterioration   of    labor,    pp.    20-38.     Economic 
effect  of  curtailed  labor,  pp.  53-63. 


INFLATION  AND  HIGH  TAXES        165 

however,  to  reduce  the  productive  powers  of  labor, 
and  it  is  probably  not  an  exaggerated  estimate  that  in 
most  industries  the  same  number  of  laborers  produce 
less  than  seventy  per  cent,  of  the  pre-war  quantity, 
owing  to  reduced  hours  of  daily  labor,  lessened  exer- 
tion, relaxed  discipline,  frequent  absence,  not  to  men- 
tion chronic  labor  strikes.  The  many  expedients  re- 
sorted to  by  the  employer,  as  a  high  wage,  bonuses, 
etc.,  have  failed  to  stimulate,  to  any  large  extent,  a 
higher  productivity  of  labor.  On  the  contrary,  they 
have  made  labor  more  independent  and  more  conscious 
of  its  power,  and  less  inclined  to  exertion.  The  low 
labor  productivity  and  not  the  high  wage  is  primarily 
responsible  for  the  inflated  cost  of  living,  for  when 
production  is  adequate  to  meet  the  demand  neither  the 
wage  nor  the  cost  of  living  can  materially  rise.  When 
a  high  wage  is  instrumental  in  promoting  efficiency  and 
increasing  production  it  lowers  the  cost  of  the  product 
in  spite  of  the  higher  cost  of  labor. 

It  is  contended  that  the  present  labor  problem  will 
find  its  natural  solution  when  industrial  and  financial 
reaction  puts  a  check  upon  expansion  and  inflation, 
and  the  laws  of  supply  and  demand  react  on  labor  and 
restore  a  normal  economic  balance.  But  this  can  pro- 
duce only  a  temporary  relapse,  for  unless  the  world's 
industries  become  permanently  prostrated,  or  society 
reverts  to  forced  labor  or  slavery,  the  power  of  labor 
will  survive  a  temporary  setback,  and  will  again  assert 


i66  LABOR'S  CRISIS 

itself  with  full  force  when  normal  conditions  are  re- 
stored. 

The  inflated  cost  of  living  operates  against  the  rich 
as  well  as  the  poor,  but  more  particularly  and  severely 
against  those  with  a  moderate  salary  or  with  a  fixed  in- 
come. Salary,  unlike  the  wage,  is  not  based  upon  cost 
of  living,  nor  is  it  controlled  by  trade  laws,  but  is  de- 
termined by  nature  of  the  service,  by  rank  of  posi- 
tion, and  by  individual  merit.  Inasmuch  as  the  salary 
does  not  closely  follow  the  trend  of  the  cost  of  living, 
the  brain  worker  must  adjust  himself  to  a  lower  stand- 
ard of  living  when  economic  inflation  greatly  reduces 
the  purchasing  power  of  his  salar}^  This  downward 
readjustment  becomes  all  the  more  oppressive  to  the 
salaried  brain  worker  because  by  environment,  calling 
and  training,  he  has  to  maintain  a  different  standard 
of  living  than  is  essential  to  the  laborer  or  mechanic. 
The  latter  is,  by  centuries  of  training,  accustomed  to  a 
coarser  and  simpler  life,  and  he  is  not,  as  a  rule,  con- 
cerned in  the  refinements  of  life.  Society  makes  few 
demands  upon  him  and  he  is  not  under  the  necessity  of 
paying  regard  to  outward  appearances  and  to  social 
conventions.  However  shabby  his  clothes  or  however 
objectionable  his  living  (|uarlcrs,  it  does  not  affect  his 
wage.  The  average  salaried  brain  worker,  on  the  other 
hand,  is  by  circumstances  of  his  employment  and  by 
environment  compelled  to  obsen'e  social  conventions 
and  obligations,  and  he  cannot  be  indifferent  regard- 


INFLATION  AND  HIGH  TAXES        167 

ing  matters  which  give  at  least  an  outward  appearance 
of  respectabihty.  He  cannot  adapt  the  customs  and 
ways  of  the  laborer  even  in  trivial  matters  without 
lowering  his  social  status  and  endangering  his  eco- 
nomic interest.  It  would,  for  instance,  violate  the  dig- 
nity of  his  position  if,  for  the  sake  of  economy,  he  were 
to  bring  a  "  dinner  pail  "  to  his  place  of  work,  as  is 
characteristic  of  the  manual  laborer. 

It  does  not  necessarily  follow  from  all  this  that 
measured  by  material  requirements  the  standard  of 
living  of  the  wage  earner  is  lower,  but  it  differs  from 
that  of  the  brain  worker  in  so  far  that  the  cultural  and 
intellectual  phases  do  not  form  an  essential  part  of  it. 
The  same  standard  of  living  is  not  applicable  to  both, 
for  what  forms  an  essential  requirement  to  the  one  is 
a  non-essential  to  the  other,  excepting  when  it  relates 
to  material  wants  necessary  for  physical  existence. 
Under  the  existing  economic  conditions  the  mental  la- 
borer with  his  rigid  salary  is  forced  down  to  a  lower 
level  of  existence,  whereas  the  physical  laborer  is  being 
elevated  to  a  higher  level  because  the  more  pliable  wage 
does  fully  meet  the  inflated  cost  of  living. 

The  wage  earner  has  also  the  advantage  over  the 
salaried  worker  that  in  many  occupations  his  services 
beyond  the  prescribed  hours  command  an  enhanced 
price,  and  he  has  frequent  opportunities  of  increasing 
his  revenue,  if  he  is  so  inclined.  But  even  if  we  were 
to  assume  that  the  earning  power  of  the  wage  earner 


i68  LABOR'S  CRISIS 

does  not  equal  the  salary  of  the  average  brain  worker, 
he  would  nevertheless  be  in  a  better  economic  condition, 
because  his  essential  wants  involve  a  smaller  expendi- 
ture. The  economic  betterment  is  even  more  marked 
in  the  common  and  unskilled  laborer,  who  is  emerging 
from  a  state  of  abject  poverty  to  a  higher  level  of  ex- 
istence. He  has  for  ages  occupied  the  lowest  position 
in  the  social  scale,  intensifying  the  labor  problem  and 
spreading  poverty.  His  extreme  toil  and  hardship  in- 
sured him  only  a  bare  existence  even  under  normal 
conditions.  Whatever  evils  may  otherwise  be  attrib- 
uted to  the  world  war,  it  has  raised  the  common  laborer 
from  degradation,  and  has  given  him  the  spirit  and  the 
power  to  demand  social  justice  and  economic  recog- 
nition the  world  over. 

It  may  be  argued  that  the  material  advancement  of 
the  laborer  is  due  to  an  abnormal  economic  condition 
and  that  he  will  resume  his  former  relative  position  in 
the  economic  organization  when  the  laws  of  supply  and 
demand  restore  normality.  It  is  a  mistake,  however, 
to  attribute  the  elevation  of  labor  purely  to  existing 
economic  circumstances.  Labor  progress,  so  far  as  it 
relates  to  the  shorter  workday,  improved  working  and 
living  conditions,  and  abolition  of  child  labor,  was 
largely  the  result  of  pul)lic  sentiment.  Long  before 
inflation  l)ccamc  manifest  the  wage  was  persistently  ris- 
ing for  a  numljcr  of  years  as  shown  in  Tables  I  and  11. 
That  a  decided  industrial  reaction  will  temporarily  af- 


INFLATION  AND  HIGH  TAXES        169 

feet  labor  and  wages  may  be  taken  for  granted,  but  the 
conditions  of  the  nineteenth  century,  when  the  laborer 
toiled  almost  unbelievable  hours  to  earn  the  means  for 
a  bare  existence,  cannot  be  restored  unless  labor  is  re- 
duced to  a  state  of  utter  helplessness.  No  more  than 
those  conditions  can  be  revived,  can  a  labor  policy  sur- 
vive which  confounds  equal  opportunities  with  special 
privileges,  and  arbitrarily  eliminates  the  economic  bene- 
fits which  should  distinguish  the  competent  from  the 
incompetent,  the  industrious  from  the  lazy,  the  thrifty 
from  the  wasteful.  It  violates  the  fundamental  prin- 
ciples of  society,  if  not  the  laws  of  nature,  when  it 
offers  a  decent  existence  to  all  alike,  regardless  of  in- 
dividual merit  and  effort. 

It  is  true,  nevertheless,  that  the  industrial  de- 
velopment and  expansion  of  the  nineteenth  cen- 
tury received  its  impetus  and  aid  from  the  state  of 
servitude  and  degradation  of  labor,  which  offered  an 
unlimited  supply  of  labor  at  a  low  wage.  The  pro- 
ductiveness of  labor  was  all  the  greater  because  ex- 
treme want  imposed  upon  the  laborer  maximum  effort 
which  was  restricted  neither  by  law  not  by  labor  regu- 
lations but  by  the  endurance  of  the  individual  laborer. 
Without  the  vital  factor  of  an  almost  inexhaustible 
supply  of  labor,  the  vast  industrial  strides  would  have 
been  impossible,  notwithstanding  the  marked  mechan- 
ical inventions  which  distinguished  that  period.  In  the 
face  of  the  exhausted  labor  reservoirs  of  the  present 


170  LABOR'S  CRISIS 

day,  the  conclusion  seems  justified  that  industrial  ex- 
pansion has  reached  its  climax  and  further  develop- 
ment is  unlikely,  excepting  in  countries  particularly 
favored  by  a  large  supply  of  labor,  unrestricted  hours 
of  labor,  and  a  low  wage,  as  is  the  case  in  China  and 
in  India. 

Another  factor  which  has  a  strong  bearing  upon 
future  industrial  development,  and  expansion,  is  cap- 
ital. Industrial  development  demands,  as  already 
pointed  out,  an  adequate  and  a  responsive  supply  of 
labor,  but  above  all  else  it  is  promoted  by  saving  or 
earning,  which  is  the  basis  of  capital.  The  nineteenth 
century  strongly  favored  and  facilitated  the  accumula- 
tion of  wealth  and  the  operation  of  capital,  and  par- 
ticularly in  the  United  States,  where  income  was  im- 
mune from  heavy  tax  burdens,  and  free  from  legis- 
lated restrictions.  This  liberal  policy  has  in  recent 
years  been  completely  reversed  by  drastic  laws  which 
divert  a  large  portion  of  the  income  of  the  rich  from 
productive  employment  to  the  payment  of  taxes.  Un- 
der the  operation  of  the  Federal  income  tax  law  an 
income  of  $106,000  is  reduced  approximately  after 
payment  of  taxes  to  $65,000,  and  an  income  of  $500,- 
000  is  reduced  to  $177,000,  not  taking  into  account 
state  and  municipal  taxes  to  which  the  income  is  now 
also  subject.  It  is  not  a  prc])ostcrous  statement  that 
where  the  rich  have  foniicrly  expended  on  family 
maintenance  one-half  of  tlu'ir  income,  they  now  have 


INFLATION  AND  HIGH  TAXES        171 

to  resort  to  retrenchment  although  their  income  re- 
mains the  same,  as  otherwise  they  must  face  a  deficit 
at  the  end  of  the  year,  owing  to  the  graduated  tax, 
and  to  the  increased  cost  of  Hving  estimated  at  over 
100  per  cent.  The  effect  of  the  graduated  tax  is 
clearly  conveyed  by  the  fact  that  a  pre-war  income  of 
$500,000  was  equal  to  a  present  day  income  of  $2,100,- 
000,  or  in  other  words,  the  Government's  share  in  the 
latter  is  approximately  $1,600,000.  Income  becoming 
capital,  does  not  remain  dormant  but  is  applied  to 
produce  additional  income,  and  therefore  the  amount 
diverted  to  the  payment  of  taxes  becomes  unproductive, 
unless  the  Government  should  apply  the  collected  taxes 
to  maintain  and  control  productive  employment.  This 
would  be  consistent  with  the  fundamental  principles 
of  socialism,  but  opposed  to  the  fundamental  prin- 
ciples of  our  democracy.  High  taxes,  lowered  produc- 
tivity and  deficient  and  depreciated  capital  are  not  in- 
centives for  industrial  expansion,  nor  are  they  symp- 
toms of  a  sound  social  order.  Unless  labor  can 
be  stimulated  to  greater  efforts  and  is  instrumental  in 
producing  increased  wealth,  violent  economic  reac- 
tions, accompanied  by  industrial  recession  and  a  gen- 
erally lowered  standard  of  living  seem  inevitable,  and 
particularly  in  countries  where  economic  progress  has 
been  most  marked. 

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